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Strategies & Market Trends : The Final Frontier - Online Remote Trading -- Ignore unavailable to you. Want to Upgrade?

To: steve goldman who wrote (3782)	4/21/1998 2:01:00 PM
From: LTBH	Read Replies (2) \| Respond to of 12617

Margin Mechanics - Any Help Appreciated Hello Steve, I am sorry that I am not NT user, would like to help but can't (HW is mostly my forte). However, you sure could give me a hand. Being new to day trading and margin, I have read your posts with interest. But I haven"t found a clear and concise discussion of the mechanics governing daytrading and margin accounts. Since this is at the heart of daytrading I feel it requires a complete and accurate understanding. The following is my understanding although it seems contradictory. Could you please correct and or amplify where appropriate. Reg T relegates daytrading to a margin account. NYSE requires a minimum $2K deposit in a margin account. Reg T margin requirement is 50% of trade. NYSE Rule 431 requires a maintenance excess equity equal to initial Reg T requirement on the largest daytraded position held during the day. Therefore: With a given $12K cash and holding the max position in one stock; I will have $6K in maint excess and a $12K stock position. In other words, a day trader fully positioned in one stock is not leveraged any more than a straight cash position. Margin leverage for a day trader only becomes efficient when holding 4 or more equal positions. Additional Considerations: Do house rules on maintenance excess for concentrated positions generally cause a more diluted position than outlined? If so, what is the range? If the maintenance excess is held in a bond mutual fund purchased through the broker, is the full actual fund account value applied? If derated, by what amount? Thanks Networm