about margin buying power

Thank you for very close explanations!
When open account, initial buying power is 2times amount of cash account, but if I do daytrading at once, the buying power will
change to be 4 times amount of cash amount immidiatly,right?
Anyway, if I do daytrading only, ie, buy and sell in same day and
dont do overnight position everyday,
the margin buying power will be 4times amount of cash amount continiously,right?
If I dont do daytrading for 1 week, then my buying power will be 2times amount of cash amount, but if I again do daytrading, the buying power will chage to 4times of cash amount immidiately, right?
I am looking forward to your timely answer!
 
Quote from alanm:

As I said, you should have 4:1 intraday buying power for a >$25K account at any reasonable broker. You generally will have only 2:1 if you want to hold a position overnight. How and when each broker enforces that rule varies - you need to check with the broker to be sure.

In the case of IB, for example, you have to meet the 2:1 requirement at about 15:45 ET. So, with 100K cash, you can take a 400K position, but you have to sell at least half of it (down to 200K) by 15:45. You can buy back 200K (total 400K) again after about 16:00 and hold it overnight. I think you probably have to do the same again the next day if you want to continue to hold the position, since it's considered a new position.

That is, I believe the max you can do with $100K is:

Day 1, 10:00 Buy 4000 XYZ @ $100 (total position 4000 = $400K)
Day 1, 15:40 Sell 2000 XYZ @ $100 (total position 2000 = $200K)
Day 1, 16:15 Buy 2000 XYZ @ $100 (total position 4000 = $400K)
Day 2, 15:40 Sell 2000 XYZ @ $100 (total position 2000 = $200K)
etc.
More...

With IB, what is the short-sale buying power? Can you short sale 4 times your cash balance?
 
I don't know if it takes 3 or 4 day trades to get to be labeled a PDT or whether it happens as soon as you put $25K or more in the account, but does it really matter?

Once your account is marked as PDT, you have 4x forever (as long as you have >= $25K equity).
 
You have 4:1 buying power based on NYSE excess equity even below $25k. Once you a labeled PDT you are required to maintain $25k.

It also looks like your day trades are cumulative towards your day trade BP.

NYSE RULE 431, paragraph f, section 8, (b)

DayTrading (this is not the entire section)

(ii) The term "pattern day trader" means any customer who executes four (4) or more day trades within five (5) business days. However, if the number of day trades is 6% or less of total trades for the five (5) business day period, the customer will not longer be considered a pattern day trader and the special requirements under paragraph (f)(8)(B)(iv) of this Rule will not apply.

Whenever day-trading occurs in a customer's margin account the special maintenance margin required for the day trades in equity securities shall be 25% of the cost of all trades made during the day. For non-equities securities, the special maintenance margin shall be as required pursuant to the other provisions of this Rule. Alternatively, when two or more day trades occur on the same day in the same customer's account, the margin required may be computed utilizing the highest (dollar amount) open position during that day. To utilize the highest open position computation method, a record showing the "time and tick" of each trade must be maintained to document the sequence in which each day trade was completed.

(iv) Special Requirements for Pattern Day Traders.

(1) Minimum Equity Requirement for Pattern Day Traders.—The minimum equity required for the accounts of customers deemed to be pattern day traders shall be $25,000. This minimum equity must be maintained in the customer's account at all times (see Supplementary Material .40 of this Rule).

(2) Pattern day traders cannot trade in excess of their day trading buying power as defined in paragraph (f)(8)(B)(iii) above. In the even a pattern day trader exceeds its day trading buying power which created a special maintenance margin deficiency, the following actions will be taken by the member organization:

(a) The account will be margined based on the cost of all the day trades made during the day, and

(b) The customer's day trading buying power will be limited to the equity in the customer's account at the close of business of the previous day, less the maintenance margin required in paragraph (c) of this Rule, multiplied by two, for equity securities.

(3) Pattern day traders who fail to meet their special maintenance margin calls as required within five business days from the date the margin deficiency occurs will be permitted to execute transaction only on a cash available basis for 90 days or until the special maintenance margin call is met.

(4) Pattern day traders are restricted from utilizing the guaranteed account provision pursuant to paragraph (f)(4) of this Rule for meeting the requirements of paragraph (f)(8)(B).
 
I will open margin account,
I am not sure, the margin account and daytrading account is same ? or should I need to write more papers to open day trade account?
If I open margin account, It will me automatically cahnged to be day trade account when once I trade many buy and sell at same days?
 
Open a margin account, once you've made 4 day trades in a 5 business day period you will be labeled PDT.

Note that the 5 business day period is not Monday through Friday.
It is any 5 consecutive business days.
If you make 3 day trades on Friday and 1 day trade the following Thursday you are a pattern day trader.
 
once you've made 4 day trades in a 5 business day period you will be labeled PDT. >>

When I will be labeled pattern day trader, broker will make me write documents for dattern day trader?
or I dont need to write to send any paper works to broker?

Some broker said the margin buying power is 2 times of cash size,
but the othervbroker said that is 4 times of cash size.
So I wonder the buying power scale can be ruled by brokers themselves if less than 4 times of cash size?
 
no paper work needed, your broker will be kind enough to add the PDT label as well as the $25K equity requirement to your account for you.

Brokerage houses can increase margin requirements which in turn lower your buying power.
 
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