Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

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

To: LPS5 who wrote (13077)	5/28/2001 6:21:37 PM
From: RockyBalboa	Read Replies (1) \| Respond to of 18137

New rules: Important Information About Day Trading Margin As you should already be aware, from time to time you can receive a "call" for additional equity in your margin account. We hope that you are also aware that a margin call is an important matter that requires your immediate attention and action. What you may not know is that in certain circumstances you can receive a type of margin call known as a "day trading call". The purpose of this email is to alert you to this possibility and describe the conditions in which they might arise. What is a day trading call? Although you may not consider yourself a day trader, all Datek customers are subject to NASD regulation, which includes being subject to a day trading margin call. A "day trade" is when you open a new position and then close it during the same trading day. But merely executing a day trade does not necessarily create a call. Day trading margin rules are applied only to accounts that exhibit a pattern of day trading, which is defined as making three day trades within any 12-month period. Once an account has been identified as a day trading account, a day trading call is created if the opening transaction of any subsequent day trade exceeds the account's day trading buying power. What is my day trading buying power? In most circumstances your day trading buying power will be equal to the buying power displayed on your portfolio page. However, there are some situations where that is not the case. Two examples will help illustrate this: 1. If you begin the trading day with an existing position in your account, and you then sell that stock, our Portfolio page will calculate your buying power according to the rules for positions held overnight. This might overstate your buying power for day trading purposes. As a general rule of thumb, your day trading buying power is the lesser of: a) The buying power shown on your Portfolio page, or b) 75% of the value of your long stock value Less 130% of the value of your short stock value Less your margin debit balance (or plus your cash credit balance) >>Then multiply the above sum by two. 2. If you begin the day with existing buying power and do not liquidate any positions held over the previous night, then your day trading buying power remains fixed for that entire day, equal to the buying power shown on your account at the start of the day. The important fact to recognize from this rule is that profits from day trades do not contribute to your day trading buying power during that day. How do I satisfy a day trading margin call? A day trading margin call must be met with a deposit of funds, or of securities having a "loan value" at least equal to the call amount. A day trading call is due within five days. Liquidating securities will not satisfy a day trading call. What happens if I don't satisfy a day trading margin call? Unlike most other types of margin call, we will not liquidate securities in your account to satisfy a day trading margin call. You should not however regard this fact as meaning that meeting the call is not important. When you do not satisfy a day trading margin call with a deposit to your account within five days, your account will be charged with a "strike", indicating that you did not meet the call. If you accumulate three strikes within a 12-month period your margin trading privileges will be suspended for 90 days. If your margin trading privileges are suspended you will either be restricted to trading with only the cash balance in your account, or, if your account has a debit balance, restricted to closing transactions only. This is a complicated matter, and one that requires your diligent attention. If you have any questions about your margin account, please send email to support@datek.com. Thank you, Datek Online Brokerage Services