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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: marketbrief.com who wrote (2671)	8/12/1999 12:34:00 PM
From: Bilow	Read Replies (1) \| Respond to of 18137

Hi marketbrief.com; Regarding the one scary thing in the report - where it talks about trader's habit of moving money around to cover intraday margin calls. To the uninitiated, this probably looks dangerous as hell. But the big market makers are held to much lower margin requirements on their holdings, I believe, and have much higher systemic risks. (I.e. black Mondays are more likely to put them under than daytraders.) When I own a stock for a couple seconds in the middle of the day, I have to show 50% margin. My risk is minuscule, but I have to show the same margin that mom and pop show when they buy silly stocks on overnight holds. Then, mom and pop get to keep holding as long as their margin stays above (depending on the broker &c.) 25%. This is for risky overnight holds. I think it is silly that daytraders have to show 50% margins on intraday holds. 25% would be more realistic. But given the 50% margin requirement, and given the low actual risks, it is quite realistic for daytraders to loan each other margin covering capital overnight. -- Carl