You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Are settlement rules different for daytraders?
- Thread starter IronFist
- Start date
IronFist, If you have at least $2k in your account, you can ask your broker to add margin privileges in your account. Unlike in cash accounts, you can (short-) sell first, and buy (-to-cover) later in margin accounts. In a margin account (without being flagged a "pattern-day-trading"), you can still do 3 round-trip (i.e., opening and closing a position on the same day) trades in a rolling 5 day period. However, if your cash account is an IRA, you will not be able to borrow any extra funds, nor will you be able to short-sell.
Quote from GTC:
In a margin account (without being flagged a "pattern-day-trading"), you can still do 3 round-trip (i.e., opening and closing a position on the same day) trades in a rolling 5 day period.
So, what you are saying, is that, if you bought and sold stock once a day, every day for a week, you will be flagged as PDT? And then what? What happens if you get flagged PDT, just the 25k floor kicks in and the 4:1 margin? Is that a bad thing?
Thanks
Todd
Quote from GTC:
IronFist, If you have at least $2k in your account, you can ask your broker to add margin privileges in your account. Unlike in cash accounts, you can (short-) sell first, and buy (-to-cover) later in margin accounts. In a margin account (without being flagged a "pattern-day-trading"), you can still do 3 round-trip (i.e., opening and closing a position on the same day) trades in a rolling 5 day period. However, if your cash account is an IRA, you will not be able to borrow any extra funds, nor will you be able to short-sell.
A "rolling 5 day period" means 5 consecutive trading days, right? So like M-F or W-Tu, right? But if I do a 4th round trip within 5 days then I get flagged as a pattern day trader, right?
Is it possible to have a margin account but not use margin? So, I'm a new college grad who's been working for about 1.5 years and I have $10k in my trading account. If I were to convert that to a margin account I would have $40k of buying power, right? But what if I wanted to buy only $2k of a stock but not use any margin at all? Can you specify?
And it's 4:1 margin for intraday trades and 2:1 if you want to hold positions overnight, right?
In 1/06 I will have had my account for a year (non-margin) and I was thinking about changing it to a margin account so I can short. I just want to make sure I completely understand everything first.
Thanks.
Three trades in five business days . Do a fourth one and your account will be flagged PDT. If I recall 4 to 1 intraday only applies to if you have 25k or more in your account. If not then you get 2:1.
Quote from IronFist:
A "rolling 5 day period" means 5 consecutive trading days, right? So like M-F or W-Tu, right? But if I do a 4th round trip within 5 days then I get flagged as a pattern day trader, right?
Is it possible to have a margin account but not use margin? So, I'm a new college grad who's been working for about 1.5 years and I have $10k in my trading account. If I were to convert that to a margin account I would have $40k of buying power, right? But what if I wanted to buy only $2k of a stock but not use any margin at all? Can you specify?
And it's 4:1 margin for intraday trades and 2:1 if you want to hold positions overnight, right?
In 1/06 I will have had my account for a year (non-margin) and I was thinking about changing it to a margin account so I can short. I just want to make sure I completely understand everything first.
Thanks.
I don't think that any broker will charge interest on day trading use of margin.
if you have 10k in your account and decide to buy 2k worth of XXX then you are not using margin.
if you decide to short XXX then you are.
It is possible to have the margin account and not to borrow if you don't want to. In fact, in that way, you can use the proceeds of your previous trades without having to wait till your trades settle in 3 days.
5 rolling days means 5 consecutive business days when the stock market is open. If you place a 4th day-trade (round trip) within 5 rolling days (provided the number of round-trip trades is 6+% of your total trading activities), your account will be flagged as PDT. If you r account is flagged as PDT, you must meet some requirements. For example, you need to keep your account value at least $25k to place a opening trade. Your overnight margin requirements is usually 2:1, but your day-trade buying power is 4:1. For some reasons, if you end up holding more stocks than your overnight margin requirements allow, you could very well be in different type of margin calls from your broker, and the broker may restrict your account for 90 days if you cannot meet that call.
5 rolling days means 5 consecutive business days when the stock market is open. If you place a 4th day-trade (round trip) within 5 rolling days (provided the number of round-trip trades is 6+% of your total trading activities), your account will be flagged as PDT. If you r account is flagged as PDT, you must meet some requirements. For example, you need to keep your account value at least $25k to place a opening trade. Your overnight margin requirements is usually 2:1, but your day-trade buying power is 4:1. For some reasons, if you end up holding more stocks than your overnight margin requirements allow, you could very well be in different type of margin calls from your broker, and the broker may restrict your account for 90 days if you cannot meet that call.