Hey,
I am also a very new trader and am having trouble understanding how things work. I was thinking of doing some day trading. If I understand that right it means that I buy and sell the same stock in the same day. When I login to Suretrade it tells me that:
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NYSE Rule 431 (the 90-day restriction rule)
A "day-trader" is any customer who purchases and sells (or sells and purchases) the same security on the same day, regardless of their opening or closing position.
If a client is "day-trading" in a cash account, this falls under the "90-Day Restriction Rule". According to Rule 431, "no member organization shall permit a customer to make a practice, directly or indirectly, of effecting transactions in a cash account where the cost of securities purchased is met by the sale of the same securities". If a client sells securities in his or her cash account prior to having paid for them, no additional purchases may be made in that account for a period of 90 days following the sale, unless full payment is received before the order is executed.
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So, after reading this, I go to my balances account, it says I have a Margin Balance available. But, I am a little chicken because if my ignorance about margin trading. I have also tried to find a good FAQ to explain this, but have been unsuccessful. I did find a few references to "If you margin trade, you could lose you shirt by trading on credit, etc". Hence the fear, can someone explain this to me?
Thanks
Mikey
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