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Strategies & Market Trends : Day Trading Rules -- Ignore unavailable to you. Want to Upgrade?

To: Mikey who wrote (6)	4/30/1998 4:28:00 PM
From: Winston Kim	Read Replies (1) \| Respond to of 40

Mikey, Let me see if I can help.....Margin is nothing but a loan that your brokerage gives to you..... When daytrading I suggest that you call you broker on the day you want to daytrade and ask how much daytrading power you have.... Daytrading is nothing more than buying and selling the stock on the same day....when you use a cash account over a margin account to daytrade it is different... Cash account means you must have the cash to meet the buy....usually stocks under 5 bucks are not marginable...it is usually better to buy on margin because it give you more buying power... Let's say you have 5,000 in your account all cash...that is your equity...if you open up a margin account you usually get another 5k in borrowed money from your brokerage house...so you have 10k in buying power of marginable securites....usually there is a 50 percent equity requirement... Winston

To: Mikey who wrote (6)	5/1/1998 9:32:00 AM
From: BrianL	Read Replies (1) \| Respond to of 40

Mikey, Regarding the rule you quoted, i think this is just the SEC rule against "wash sales." As I recall, the wash sale rules were promulgated in the 30's in response to people artificially generating a lot of interest in a stock by simultaneously buying and selling large quantities of stock. This didn't do anything for them-- it was a wash-- but it would cause others to notice the stock and start buying. When the price got high enough, the wash sellers would sell.

To: Mikey who wrote (6)	5/2/1998 11:39:00 PM
From: maria	Read Replies (1) \| Respond to of 40

Mikey, DLJ responded to my email about buying and selling a security all in the same day as follows: In response to your inquiry, you are referring to a practice known as "daytrading". According to regulation T, daytrading is prohibited in a cash account and only allowable in a margin account. If you purchase and sell a stock without full payment for the purchase being received in a cash account, this practice would require us to place your account on restriction for 90 days. This restriction is mandated under Regulation T of The Federal Reserve. If the stock was fully paid for by funds being present in the cash account, you would not be subject to this restriction. However, the funds would not be available to purchase another stock until the following day. In a margin account, your buying power, which is the amount of funds you could borrow against the stock in your margin account, would determine how much you could daytrade. Basically, if you had $10,000 buying power, you could purchase $10,000 of stock and then sell that and then buy another $10,000 worth of stock with the proceeds of the sale. If you exceed your buying power at any time during the trading day, you would have to come in with additional funds otherwise you would not. FWIW, -M