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Strategies & Market Trends : Momentum Daytrading - Tricks of the Trade
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To: RealMuLan who wrote (738)3/18/1998 3:32:00 PM
From: Spots  Read Replies (3) of 2120
 
>>What Datek did is that they charge 7%
interest on $30k proceeding, and haven't pay me the 4% interest on
my own money. I don't think this is right.

I guess it depends on what you mean by "right." I'm no expert
on Datek's margin policies for short sales, though since I
opened and account there last summer they have changed
their policies for the (our) worse in
the past couple of months. At one point they paid 4% on short
balance and then charged 7% margin interest for net 3% (I think).

As far as I know, there aren't rules about the margin interest
per se; only the reg-T rules about minimum equity, etc.

As an example of my earlier post, this is from Schwab a couple
of years ago. With plenty of equity but no cash balance,
I shorted a position worth (about) 50k. Immediately after
the transaction, I showed equity 50k debit on the short
security and 50k credit on the short sale proceeds. Net
balance zero, and no margin interest charged.

Each day Schwab marked the position to the market. If the
stock rose by 5k (so I had 5k loss), the position would
show 55k debit on the short and 50k credit on the proceeds
for net 5k debit. In that case, I was charged margin interest
on 5k for the day. If the stock dropped to 45k (I had a 5k
gain), the position showed 45k debit for stock and 50k credit
for proceeds for a net 5k credit, and Schwab paid me free cash
balance interest on the 5k for that day. Of course, the margin
and free cash interest were cumulative; I'm being sloppy for
illustration. This was 2-3 years ago; Schwab may have changed
their policies by now for all I know.
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