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I messed up....
- Thread starter Rchemo
- Start date
If you are serious about day trading I strongly suggest you take $5-$10K and find yourself a fairly reliable Prop firm. You'll get at least 10:1-20:1 leverage, your commissions will be much lower (at least on a per share basis), and you will have fast direct access to the markets.
As far as your current broker, if they don't accommodate you with this "margin paperwork" issue, I urge you to find another one ASAP. I personally have not had experience with a retail brokerage in a long time, however, to me your situation sounds like B.S. from their side. From what I remember, not having a margin account means you can't short-sell, you can't borrow $$$ from the broker, and you have to wait around 3 days for your trades to settle. When I just started out I had an account with Datek (now Ameritrade) and when I initially did not have a margin account they just did not allow me to execute trades until they settled. So IMO it's their fault for even allowing you to execute when you in fact did not have a margin account. Obviously, since you have over $25K, the patterned day trader B.S. is not an issue...
So if they don't work with you just sit on your hands and wait until all of your trades settle, once they do, do yourself a favor, and open at least a second account if you intend to do short-term trading. From my experience, using the same account for investing and trading is not a good idea anyways...
As far as your current broker, if they don't accommodate you with this "margin paperwork" issue, I urge you to find another one ASAP. I personally have not had experience with a retail brokerage in a long time, however, to me your situation sounds like B.S. from their side. From what I remember, not having a margin account means you can't short-sell, you can't borrow $$$ from the broker, and you have to wait around 3 days for your trades to settle. When I just started out I had an account with Datek (now Ameritrade) and when I initially did not have a margin account they just did not allow me to execute trades until they settled. So IMO it's their fault for even allowing you to execute when you in fact did not have a margin account. Obviously, since you have over $25K, the patterned day trader B.S. is not an issue...
So if they don't work with you just sit on your hands and wait until all of your trades settle, once they do, do yourself a favor, and open at least a second account if you intend to do short-term trading. From my experience, using the same account for investing and trading is not a good idea anyways...
Cash account is T + 3 on settlement. Sounds to me they screwed up by letting you execute those trades before they settled. I say dump your broker and find a new one, Ameritrade, or IB would be a decent choice. And on this new account make sure you set it up as a margin account to avoid this issue.
Todd,
A better brokerage firms' system should have given you enough warnings and prevent you from being in such situations in a cash account. For example, Ameritrade's system would have automatically prevented you.
Try to convince your broker to see if they can waive you any of the cash-call requirements. (After all, it is part of their problems too). Even if HarrisDirect/E-trade does not waive you, you still can take the following steps.
Step-1: Stop trading in your account for the time being as soon as you can. If you currently still have open positions (which is not going against you), try to hold them at least 3 days
Step-2: Since you have a lot of money, I assume you can ask credit card company to borrow you some money. Sometimes they can just wire it your destination fairly quickly. (You may also want to use those promotional credit card checks to get part of that $20k+ you need). Remember it is a very short term (i.e., around 1 week) loan.
Step-3: Send that $20k to your broker to meet that cash-call immediately.
Step-4: Even after they receive your payment, do not start placing trades with them. They may require you to wait a couple of days before you can withdraw it back. (Ask them exactly when you can withdraw that money back before you even send them any cash.)
Step-5: Once you withdraw your money back, you can pay to the credit cards.
Step-6: Regardless the outcome of your current situation. I think it will be better to start the process of moving your account(s) out of HarrisDirect/E-trade to another broker. Open a margin account with another broker. Then you can start placing your trades again.
This whole process should take 1-2 weeks. You don't have to wait 3 months. In this 1 week or so, you can paper-trade, search for a better broker, and demo/trial better platforms, etc.
A better brokerage firms' system should have given you enough warnings and prevent you from being in such situations in a cash account. For example, Ameritrade's system would have automatically prevented you.
Try to convince your broker to see if they can waive you any of the cash-call requirements. (After all, it is part of their problems too). Even if HarrisDirect/E-trade does not waive you, you still can take the following steps.
Step-1: Stop trading in your account for the time being as soon as you can. If you currently still have open positions (which is not going against you), try to hold them at least 3 days
Step-2: Since you have a lot of money, I assume you can ask credit card company to borrow you some money. Sometimes they can just wire it your destination fairly quickly. (You may also want to use those promotional credit card checks to get part of that $20k+ you need). Remember it is a very short term (i.e., around 1 week) loan.
Step-3: Send that $20k to your broker to meet that cash-call immediately.
Step-4: Even after they receive your payment, do not start placing trades with them. They may require you to wait a couple of days before you can withdraw it back. (Ask them exactly when you can withdraw that money back before you even send them any cash.)
Step-5: Once you withdraw your money back, you can pay to the credit cards.
Step-6: Regardless the outcome of your current situation. I think it will be better to start the process of moving your account(s) out of HarrisDirect/E-trade to another broker. Open a margin account with another broker. Then you can start placing your trades again.
This whole process should take 1-2 weeks. You don't have to wait 3 months. In this 1 week or so, you can paper-trade, search for a better broker, and demo/trial better platforms, etc.
Thanks for your excellent advice...I felt the whole time it was a little strange that they temporarily restricted me after the fact, and allowed me to trade 4 or 5 times before settling. Hell, they even let me trade the next day..What's deceptive is that they debit and credit the cash balance in real time, so the funds appeared to be available. That's maybe a smidge negligent on their part. I thought perhaps this was a clever way to get more assets into the account. So, if I gleaned anything from the previous posts, Ameritrade and IB are reputable alternatives. I don't need futures or currency abilities for now, but I was very interested in Hammertrade for NYSE and Naz stocks and options. Any opinions on that software for my uses? I'd like to test drive it or Esign...
Thanks again everyone...We'll see what happens Monday..
Todd
Thanks again everyone...We'll see what happens Monday..
Todd
Since HarrisDirect/E-trade's system is still letting you buy stocks, their system may then still let you withdraw funds. (Some brokerages' system will give you up to ~5 days before they put hard 90-day restrictions on trading.) On Monday morning, try to find out if you can withdraw funds. If their system allows you, wire-out as much funds as possible.
Just sell enough securities, cash out, and open an account with a different broker with at least 25k. You shouldn't mix and match investment/swing trade account with a daytrading account anyway. Put up a wall. The restriction is buying stocks with cash only. Of course you can withdraw the cash.
The restriction doesn't follow you, it's account specific.
The restriction doesn't follow you, it's account specific.
Todd- If you have 60k worth of securities
just fax in your margin agreement and tell them to move your securities into the margin account. if your securities are fully marginable they will more than cover a temporary 20k debit. On settlement day you'll have a credit in your margin account. After that you can decide what to do.
It sounds like you want to daytrade with 5 or 6k. In the margin account you can do that(using your holdings for the equity requirement of a margin account. Until you get more experience I woud suggest that you don't trade on margin but just trade your 5-6k that you put in.
Also , would suggest you spend a little time learning basics of managing a trading account- so in the future you don't get another surprise. This would apply for usingE-Trade or any other firm
just fax in your margin agreement and tell them to move your securities into the margin account. if your securities are fully marginable they will more than cover a temporary 20k debit. On settlement day you'll have a credit in your margin account. After that you can decide what to do.
It sounds like you want to daytrade with 5 or 6k. In the margin account you can do that(using your holdings for the equity requirement of a margin account. Until you get more experience I woud suggest that you don't trade on margin but just trade your 5-6k that you put in.
Also , would suggest you spend a little time learning basics of managing a trading account- so in the future you don't get another surprise. This would apply for usingE-Trade or any other firm
Take your business elsewhere when you're done with all these restrictions. Harris Direct screwed my friend a few months back by hiding fees from him when he first signed up. I don't think those guys know how to run a business without screwing anyone.
Try Interactive Brokers or Ameritrade although my preference goes to the IB.
Try Interactive Brokers or Ameritrade although my preference goes to the IB.
If I am reading this right, there is no problem. It is your cash account getting restricted for 90 days. All you need to do is send in your margin account agreement (probably can do it online). Then you can trade with your margin account all you want during the 90 days cash account restriction. If you are holding stocks in your cash account, they still let you sell them during the restriction period... maybe you need to call the order in or something. But call up your broker to make sure.