I guess you can not sue them because they can liquidate the shares for many reasons. One of them is that you get a margin call. The other one is that the shares get called. If even one share was traded high enough to make your account margin requirement negative, they can liquidate some shares. In your case that they liquidated lots of shares. In my IB account, if the liquidate me , they do it at 15:50 if my SMA is negative or right away if my account goes negative but they do it to the amount that make me safe. I have accounts with many brokers. TD, Ameritrade, Scottrade, Fidelity. They all send you a polite letter about your margin situation and that was more dangerous because the problem might escalate. I believe if it is your habit to squeeze your account , change your broker with one of the ones that I mentioned.
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Can I sue a broker for doing this?
- Thread starter zorro1
- Start date
Quote from sarah_iru:
I never implied you exceeded your daytrading buying power (The broker would never allow a trade that exceed DTP).
I clearly stated that you used daytrade margin to hold a position overnight, you used margin money in a way it was not meant to be used.
I can see you've been googling about Reg T, so now you know about it.
So, after your research, it's fair to assume you know the answer by now:
Q: Can I sue a broker for doing this?
A: No. They were right.
I'm glad to help.
As for people being STUPID, I guess you're referring about yourself, and not about the people who took time to reply and enlightened you about Reg T, and margin calls.
No, I am referring specifically to you. After this post you come across as being beyond stupid.
Quote from zorro1:
Please address this issue. I don't want people talking to me about risk management and other such derisive remarks. I am not soliciting advise on the trading part of this trade but only want to know if I can take legal action.
Perhaps you could have had this part in bold or a larger font size?
Quote from hajimow:
I guess you can not sue them because they can liquidate the shares for many reasons. One of them is that you get a margin call. The other one is that the shares get called. If even one share was traded high enough to make your account margin requirement negative, they can liquidate some shares. In your case that they liquidated lots of shares. In my IB account, if the liquidate me , they do it at 15:50 if my SMA is negative or right away if my account goes negative but they do it to the amount that make me safe. I have accounts with many brokers. TD, Ameritrade, Scottrade, Fidelity. They all send you a polite letter about your margin situation and that was more dangerous because the problem might escalate. I believe if it is your habit to squeeze your account , change your broker with one of the ones that I mentioned.
If my shares were not liquidated, I would have been up by at least $20,000 in about ten minutes. When somebody starts liquidating 5,000 share increments in a one minute time span at market, it is sending a signal that somebody is desperately trying to cover his/her shorts. After this initial surge, the stock dipped back below the previous day's closing price and in about 2 hours was down by 7% and ended the day 10.5% lower.
Quote from zorro1:
I'll do as I please and couldn't care less what you have to say about it.
lol... yes, and it's apparently getting you into serious trouble.
A good risk management rule is to risk no more than 2% of your account on one trade. So if you were trading a $6 stock and your account size is $25,000, and you short at $6 with a stop loss of $6.50, then you are risking $0.50 per share. If you short 1000 shares and get stopped out, you have lost $500, which is 2% of your account size.
We can contrast this with your approach, which was to risk more than 100% of your account on the trade.
Hope this helps. Once again, there is a lot of good material here on ET for beginners. When you get another trading stake together, you can try again using some risk management rules and hopefully have better success.
Quote from traderNik:
lol... yes, and it's apparently getting you into serious trouble.
A good risk management rule is to risk no less than 2% of your account on one trade. So if you were trading a $6 stock and your account size is $25,000, and you short at $6 with a stop loss of $6.50, then you are risking $0.50 per share. If you short 1000 shares and get stopped out, you have lost $500, which is 2% of your account size.
We can contrast this with your approach, which was to risk more than 100% of your account on the trade.
Hope this helps. Once again, there is a lot of good material here on ET for beginners. When you get another trading stake together, you can try again using some risk management rules and hopefully have better success.
Hello, Mr !Q has had another brainwave and jumped to the conclusion that my acccount was wiped out. I'm sorry to disappoint you. Not true.
Quote from JimyJam:
sarah_iru comes across as being beyond stupid ... but you're the one who got your ass totally handed to you on your ill-concieved trade against the trend using no risk management and bad money management, such that your brokerage, believing that you were just going to sit there and watch the trade go further and further against you, did what any prudent business would have done, which was to manage their risk and close out the position.
Good one,
JJ
Looks like you spend most of your time here wiping people's asses so go ahead wipe mine.