Death Blow to DayTraders

Yup. You know what that means? That means that anyone with less than 25K won't even have an option of going short. So all the small players have to be long? That is very unfair. If I have less than 25K and we're in a bear market I want to go short I can't??? And of course they're late to the party. All the crazy daytraders who could blow out already did a long time ago.
 
traderkay,

To clarify again, those with less than 25K will still be able to use margin and go short, just not as daytrades. So if you're an investor or multiday swing trader, you will still be able to go long or short just as you did before regardless of your account size.
 
> if you have less than 25K in your account you can "daytrade" but only 3 times a week.

Be careful as that implies a normal calendar week (M-F). I think the new SEC ruling specifies a maximum of 3 times in ANY 5-day period.
 
Yes... gotta be careful about that 3 times in 5 day thing. Maybe switching to options will be the prudent move. They don't want the money of the small trader... they must figure they've got most of it in the last 2 years. ;)
 
I still understand the gripes of the under 25k crowd, or the crowd that says that the sec is wrong for deciding how we can loose our money, but I am definately for these changes.
4:1 margin is awsome. No way around it. If you just get 25k, you can have 100k. That's 5k of a 20 buck stock to look for a point or 2 on. If you come in with 100k, you are basically trading like a big boy from the start.
The elimination of the overnight rule on margin is even better. This rule has kept me out of so many overnight trades just b/c I would rather flip those shares afterhours for a half, than risk loosing the buying power from holding those 5k shares overnight for the other half point I know it will gap.
I wonder how many people on this board are in favor of these changes, cause I think they're awsome. The little guy does get screwed, but I doubt that you can trade profitably with under 25k anway, so the sec is just saving you the trouble (though you should be alowed to find out for yourself)
 
I love the changes, but agree that for many the 25k rule is out of line...

My first "trading account" was opened with about 10k, and needless to say I didn't lose it, but I had the full intention of upping the account (well above 25k) after I settled in. So, I do not understand how a full time trader (Day Trader, or what ever), or someone that is entering this "game" can have a problem with the 25k rule?

Those that have this problem are you working elsewhere and doing "some" trading on the side? In school? Hobby Trader?
 
The changes are 'OK'. 25k is about right and will save 90% of newbies from being wiped out, by simply preventing them from playing. Also, newbies putting up more than 25k will have an adequate capital base to absorb the learning curve losses, before they turn the corner into success. 4:1 margin is great, but make sure your broker refreshes your buying power in real-time, otherwise you will only be allowed to trade stocks to the value of 4x your account (thereby limiting your number of trades)... generally speaking, the direct access brokers should refresh buying power in real-time. Just think of the implications if this were NOT the case >>> a well-capitalised trader with $200k capital, trading $50k blocks would only be allowed 16 daily roundtrips (200,000*4)/50,000 ... I don't think so! The direct access brokerage industry would be killed within a few months without a facility to refresh buying power in real-time.
 
Originally posted by candletrader
The changes are 'OK'. 25k is about right and will save 90% of newbies from being wiped out, by simply preventing them from playing. Also, newbies putting up more than 25k will have an adequate capital base to absorb the learning curve losses, before they turn the corner into success.


On what reasoning do you base this? Traders with accounts that fall Under 25K will not be able to daytrade. If you start with 25K and your first trade is a loss there goes your learning curve.
25K is an arbitrary amount and has no basis in sound reasoning. This is a business where you can literally win or lose an unlimited amount of money. I don't need anybody to save ME from being wiped out, and the size of my trading account is beside the point.
This rule will eventually be repealed because it is going to become the running joke of the industry. Whenever the market becomes hot every investor out there is going to become designated a "Pattern Day Trader". I don't think they will be happy about that.

Alex
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Some will likely just put their money elsewhere. The market will lose. Why would anyone allow their account to be tied up for 90 days? If I got down close to 25 I'd put it in something else. Options is one option. I can hear 'em now; "where did the volume go?"
 
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