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

To: Ken Adams who wrote (11149)	12/26/2000 11:19:00 AM
From: exdaytrader76	Respond to of 18137

That is ok. Here is (one of) the scenarios: (be prepared to be confused) Assume you are carrying positions, and your day trading buying power is different from your overnight buying power. Monday - Buy XYZ and carry it long overnight, maxing out your overnight buying power. Tuesday, sell XYZ. Then buy ABC and sell ABC as a day trade. Later that afternoon, buy back XYZ. According to the rules, this will generate a day trading call, because the Tues sell and buy of XYZ are lumped together as a day trade. The Fed says you shorted it and bought it back, and you were required to have the necessary buying power to have had the two positions (XYZ and ABC) on simultaneously - (Even though you didn't!). Common sense would tell you that the 1st sale of XYZ is a sale of a long, not a short sale, but that is how it is regarded according to the margin rules. They (the Fed) say they are changing this rule, but I do not think they have done so yet. The rule makes no sense to me, but that is the rule. The variable seems to be the firm's enforcement of it.