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

To: Mark Davis who wrote (13343)	7/9/2001 12:24:29 PM
From: Dan Duchardt	Respond to of 18137

Mark, Are you saying that in a cash/IRA acct, you could not trade for example MSFT 5 times in a day, using the full buying power of the account each time? No, I am not saying that, but there are some brokers who operate that way. They restrict you to spending the money in your account once per day. It is my opinion that this practice is rooted in "end of day" accounting that was traditionally done when people called their brokers to make transactions instead of today's computer automated trading and accounting. In those days they did not use the sequence of trades to figure out if you had money in place for each purchase. Based on my experience, it appears they made the following assumptions: 1) Stocks held overnight and sold come first 2) Purchases made that day are next 3) Sales of stocks purchased the same day are last Based on that, the aggregate of all purchases made in one day must be no greater than the sum of cash in the account plus the proceeds from the sale of overnight holds. In principle, continuous accounting removes the need to make any such assumptions, and there are a number of brokers who allow you to spend anytime you have a net cash balance that includes the proceeds from all prior sales, regardless of which day the stock sold was purchased. This would allow you to trade MSFT as many times as you wanted as long as you had enough to start with. Dan