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$25,000 minimum for daytrading needs to be changed
- Thread starter Nostradamus357
- Start date
Quote from noob_trad3r:
you are right in that theory on some levels but if you have a bunch of undercapitalized pattern day traders borrowing on margin and blowing up it puts firms at risk. and then more bailouts.
yr kidding, it puts firms at risk? How does even 20000 <$25k noobs in one stock (maximal capital of $499,999,999) put a firm that is TBTF at risk?
Quote from candletrader:
Personally, I think that $25k is too low.
you can think any way you like it,but i believe that the MORE participants is better....
i use to believe that exchanges are thinking same way,but not anymore..because they have "new" source of income now..they not interested in our pennies..they selling all sorts of data for those,who pay more..the result? a flash crash is just a little example. every day i'm struggling to unload any decent size position,because THERE IS NO REAL LIQUIDITY on US markets. and partially because there is a lack of real participants.
Quote from Bob111:
...futures-no thank you. even if i know, that the possibilities are pretty much endless in futures and you can make unlimited amount of money..i prefer slow,but steady way..i trade what i do understand...
Bob, if you ever take the time to truly get an understanding on futures trading, I bet you would make the switch. For many years, I wouldn't even look at futures trading. My mind was made up and closed. Then, I opened my eyes.
I plan on never trading stocks again.
Quote from noob_trad3r:
25K is nothing, thats like playing the nickel slots. Seriously if you cannot scratch up 25K to pattern day trade it probably means you have poor money management skills and will suck at trading.
What is the difference between someone with $1000 sucking at trading, or someone such as yourself, with $25,000 who sucks at trading?
It's a matter of principle, not a matter of "scrounging up $25,000".
Quote from BSAM:
Me thinks there's some trolling going on here on this thread.
But, be that as it may, what if the government told you that you were spending too much money going to Walt Disney World every year? Wouldn't you tell the government that it is your money and you'll spend it how you damn well please?
BTW...Has any of your government officials told you how many lottery tickets you are allowed to purchase? I think a rule needs to be implemented such that you are only allowed 3 in a five day period. Oh, unless you have at least $25,000 in a savings account.
You can't possibly have more than one brain cell working if you are in favor of a government telling you what you can and cannot spend your money on.
Quote from BSAM:
Me thinks there's some trolling going on here on this thread.
But, be that as it may, what if the government told you that you were spending too much money going to Walt Disney World every year? Wouldn't you tell the government that it is your money and you'll spend it how you damn well please?
BTW...Has any of your government officials told you how many lottery tickets you are allowed to purchase? I think a rule needs to be implemented such that you are only allowed 3 in a five day period. Oh, unless you have at least $25,000 in a savings account.
You can't possibly have more than one brain cell working if you are in favor of a government telling you what you can and cannot spend your money on.
Spot on.
Quote from Trader7793:
Once an account has been desginated as a PDT account, you cannot spend more than your daytrading buying power, even if it is less than your cash balance.
An example that happened to someone I know. They had $87,000 in cash in their margin account. However the account had been designated as a PDT account. They bought $85k in securities and decided to hold them overnight, leaving $2000 in cash in the account. The next day their daytrading buying power was at $8000. They decided to sell their position, which brought in $86,000 in cash...so now their cash balance is $88,000. However since their start of day daytrading buying power is only at $8000 ($2000 x 4). When they tried to place a trade using $50k of their cash they received a pop up warning that if they spent more than $8000, they would have gone into a daytrading buying power call.
Market conditions and not DTCC should be determining when traders choose to exit their positions, but as someone said previously, no one cares about the retail trader anymore.
Excellent post, and it's important to understand the concept of "settled" cash balance. If you buy a security using your cash balance in a retail account and hold overnight, you CANNOT "churn" the cash once that security is sold due to Reg T rules, which makes you wait for "T+3" (trade day plus three days) in order for the cash to become settled.
I found this the hard way when I got a warning letter from my broker indicating that I had used "unsettled cash" to buy and sell stock, and was in a trade violation. I ignored it and kept trading, and then got another letter, stating that one more violation and the account would be "restricted" for 90 days, where I would not be able to buy any more securites, even though the balance was well over 25k.
There is no way around this "settled" vs. "unsettled" cash rule, regardless of your balance. So even if you have $100k in a retail account, you cannot buy and sell $1 million of stock in a day, as you'd be using "unsettled" cash once you go beyond your net cash balance.
However, if you join a prop firm, then you can lever up your capital contribution as it's cominggled with other traders, hence giving you the ability to go in/out several times with your cash without having to pay attention to whether the cash you're using is "settled" vs. "unsettled."
And I agree, the retail trader is irrelevant in today's market. The HFT algorithms control the majority of the volume, not granny buying 100 shares of Coke.