THEY BAD THEY BAD AND THEY WANT YOUR MONEY,
Alert, just picked this up on a premium thread, daytraders getting hit with "daytrader equity calls", as follows:
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I think you and others are assuming that I had a big loss that triggered the Daytrader call, it wasn't that at all. These are not like the margin calls that deal with losses, these are margin calls where they claim that I exceeded my buying power. Here is the rule I think that they are talking about.
THE RULE: Be aware that you may be subject to a day trading margin call if you exceed your day trading buying power on a position that you do not hold overnight.
I was making 3 to 4 trades a day, some short and some long.
I never held any of them overnight. I never held 2 trades at the same time. I am a small fish. So I just make one trade at a time. I exit that trade to go after another.
Also, I am curious if your brokers show your buying power as being dramatically increased? Because Datek still shows my buying power as 2 times cash.
The crazy part is this. I only have about $30,000 in this acct. Datek has assessed me a "daytrader equity call" of $70,000. TWICE MY ACCT VALUE!
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That was just an excerpt from a long, involved and complex discussion of the new daytrader rules. The traders posting on that forum are creme de la creme traders, sophisticated, yet even they seemed a bit confused. Seems different brokers have different ways of interpreting the rules.
To avoid such complications, and also because of the dangerous market we are in, I have avoided margin for quite some time, whereas I often used margin for years before.
HOWEVER, in the above discussion, some traders noted problems even in cash accounts because of the T + 3 rule.
That is your cash account doesn't settle until three days after the trade day.
Here's another post:
I missed that a bunch of that surge up last week because I didn't know that I had to wait 3 days for my trades to clear before freeing up the cash to trade again. I don't remember that being the case before but then again, I hadn't traded the ira account that heavily in quite awhile. If you are trading in your ira account, you have to be a little more careful and stick with more swing trades or risk losing your buying power for a few days until your trades clear. Can anyone suggest another broker for daytrading an ira account where this T+3 rule doesn't occur (T+1 would be much better at least)? Or are all cash accounts handled this way? Thanks for the discussion on this messy rule
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The next post from another trader notes all acounts are now settled the same way as that ira BTW, I couldn't copy that one because all the relevant info was in the header.
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I ran into this the other day on a regular account when I questioned broker on a balance and they said "the trade hasn't settled yet and that's why it's not there". Fortunately it was not a problem (I've been keeping considerable % of cash in account) and fortunately I have been doing more swing trades and less daytrades the last few weeks. Possibly if I had done some rapid fire trading as I have done in the past I would have ended up with account frozen and a bill for funds even if all cash trades under my running balance??
I am aware trades have always been settled T +3 but they used to keep a running balance, it seems they don't do that anymore.
If one has to wait for each trade to settle before using cash from that trade, that really seems to be designed to address adding liquidity to the brokers!!
Interested in any comments or experiences in respect to the new SEC rules as mentioned in italics above. Worst thing is if you trade margin and daytrade you can get in the hole for five days before the broker tells you, like the unfortunate trader in the first post!!
Roebear |
