IRA Account under 25K
- Thread starter Banditzz
- Start date
Banditzz,
IRA account is a cash account. The new sec rules do not affect cash accounts (including IRA), because they're only about margin accounts.
If not, will I still be able to make unlimited trades as long as I have money in the account to cover the securities purchased?
Yes. (Other threads discuss this in detail.)
Fohat
IRA account is a cash account. The new sec rules do not affect cash accounts (including IRA), because they're only about margin accounts.
If not, will I still be able to make unlimited trades as long as I have money in the account to cover the securities purchased?
Yes. (Other threads discuss this in detail.)
Fohat
Magna
Administrator
Banditzz,
will I still be able to make unlimited trades as long as I have money in the account to cover the securities purchased
Depends on what you mean since most people who start with $25K at the beginning of the day in a cash account, buy $10K worth of stock, sell it flat for $10K five minutes later, think it's only reasonable that they still have $25K available to them (minus commissions). My understanding is that's not the case at all. The brokerage houses, at that point, consider that you have used $10K that day, and you only have $15K left to trade that day.
Cyber told me that if I close out all transactions that day then the following day I could start again with $25K (plus or minus whatever I made or lost). They also said that the T+3 rule would only apply if I wanted to withdraw my money, but that it did not apply if I wanted to leave it in the account and trade with it. So effectively my usable cash would be T+1.
Some people on this board seem certain in their interpretation, I'm not, as there's been alot of conflicting reports.
will I still be able to make unlimited trades as long as I have money in the account to cover the securities purchased
Depends on what you mean since most people who start with $25K at the beginning of the day in a cash account, buy $10K worth of stock, sell it flat for $10K five minutes later, think it's only reasonable that they still have $25K available to them (minus commissions). My understanding is that's not the case at all. The brokerage houses, at that point, consider that you have used $10K that day, and you only have $15K left to trade that day.
Cyber told me that if I close out all transactions that day then the following day I could start again with $25K (plus or minus whatever I made or lost). They also said that the T+3 rule would only apply if I wanted to withdraw my money, but that it did not apply if I wanted to leave it in the account and trade with it. So effectively my usable cash would be T+1.
Some people on this board seem certain in their interpretation, I'm not, as there's been alot of conflicting reports.
Magna wrote:
...people who start with $25K at the beginning of the day in a cash account, buy $10K worth of stock, sell it flat for $10K five minutes later, think it's only reasonable that they still have $25K available to them (minus commissions).
That's almost correct. Since funds are settled T+3 and not in realtime, the account still has $25k. The account will remain $25k no matter how many transactions you make today, until trades beging to settle up to 3 days later (T+3).
As I demonstrated and proved on other threads: Daytrading, real time account updating and T+3 transaction settlement is allowed and possible in a cash account, according to the rules and regulations. http://www.elitetrader.com/vb/showthread.php?threadid=2360
Some brokers allow unlimited daytrading in cash accounts.
Other brokers, choose not to. As I hear, Cybertrader allows you to use the next day, the $cash plus or minus whatever you've made or lost today. This doesn't make sense. Why not allow to use them in realtime, instead of next day? Because of T+3, the transactions will settle 3 days later. The proceeds for todays transactions will not be available the next day (as Cybertrader implies), but 3 days later when the trades settle T+3!!! Cybertrader justifies using the funds the nex day, when the funds, in fact, are not available not only the next day but also for the next 3 days (all of today daytrades settle T+3, 3 days later, meanwhile the funds are unavailable)!!!
IB on the other hand, locks the proceeds from your cash accounts trades for 3 days and doen't allow you to use them for 3 days. So basically you are not allowed to trade (them) for 3 days. You have to wait 3 days to be able to trade (them) again.
Brokers are free to impose additional restrictive interpretations, and their customers are free to leave them.
Meanwhile, the rules and regulations allow daytrading in a cash accounts. No rule prohibits daytrading in a cash account.
Those brokers that offer it will probably attract the cash accounts from the brokers that prohibit daytrading in cash accounts.
Fohat
...people who start with $25K at the beginning of the day in a cash account, buy $10K worth of stock, sell it flat for $10K five minutes later, think it's only reasonable that they still have $25K available to them (minus commissions).
That's almost correct. Since funds are settled T+3 and not in realtime, the account still has $25k. The account will remain $25k no matter how many transactions you make today, until trades beging to settle up to 3 days later (T+3).
As I demonstrated and proved on other threads: Daytrading, real time account updating and T+3 transaction settlement is allowed and possible in a cash account, according to the rules and regulations. http://www.elitetrader.com/vb/showthread.php?threadid=2360
Some brokers allow unlimited daytrading in cash accounts.
Other brokers, choose not to. As I hear, Cybertrader allows you to use the next day, the $cash plus or minus whatever you've made or lost today. This doesn't make sense. Why not allow to use them in realtime, instead of next day? Because of T+3, the transactions will settle 3 days later. The proceeds for todays transactions will not be available the next day (as Cybertrader implies), but 3 days later when the trades settle T+3!!! Cybertrader justifies using the funds the nex day, when the funds, in fact, are not available not only the next day but also for the next 3 days (all of today daytrades settle T+3, 3 days later, meanwhile the funds are unavailable)!!!
IB on the other hand, locks the proceeds from your cash accounts trades for 3 days and doen't allow you to use them for 3 days. So basically you are not allowed to trade (them) for 3 days. You have to wait 3 days to be able to trade (them) again.
Brokers are free to impose additional restrictive interpretations, and their customers are free to leave them.
Meanwhile, the rules and regulations allow daytrading in a cash accounts. No rule prohibits daytrading in a cash account.
Those brokers that offer it will probably attract the cash accounts from the brokers that prohibit daytrading in cash accounts.
Fohat