Margin Interest Calculation

M

macattack

Rookie question...been a while since I had a margin account.
I don't really want a margin account, but I like to trade on a daily basis at times, and that's not possible with a cash account.

If I have a round-trip on day 1 in my cash account, and then a round-trip on day 2, I get a Reg T violation.
So to get around that restriction, I figure a margin account should work.

My main quesion:
If I have $50K in my margin account, and I make a day trade every single day of the week, only using $50k each time, will that result in margin interest?
 
If you have a Margin account with equity of $50,000 and never carry long stock that exceeds your equity overnight, there are no interest charges because you are paying for the purchases with your money. In addition, when you get leverage in a margin account and only use that for day trading, there should be no interest charges. There should also be no limit to the number of times you can use your leverage for day trading in a margin account. You should only get a Reg-T call if you carry more than 2x max overnight night or if your equity were to drop below maintenance margin. You can also get a day trading call if you exceed the leverage allowed. Did that answer your questions?


macattack said:
Rookie question...been a while since I had a margin account.
I don't really want a margin account, but I like to trade on a daily basis at times, and that's not possible with a cash account.

If I have a round-trip on day 1 in my cash account, and then a round-trip on day 2, I get a Reg T violation.
So to get around that restriction, I figure a margin account should work.

My main quesion:
If I have $50K in my margin account, and I make a day trade every single day of the week, only using $50k each time, will that result in margin interest?
More...
 
Robert Morse said:
If you have a Margin account with equity of $50,000 and never carry long stock that exceeds your equity overnight, there are no interest charges because you are paying for the purchases with your money. In addition, when you get leverage in a margin account and only use that for day trading, there should be no interest charges. There should also be no limit to the number of times you can use your leverage for day trading in a margin account. You should only get a Reg-T call if you carry more than 2x max overnight night or if your equity were to drop below maintenance margin. You can also get a day trading call if you exceed the leverage allowed. Did that answer your questions?
More...
That answers my question, thanks!
I didn't realize you can even use leverage without interest if day trading only.

I would still prefer to have a cash account where settlement wasn't an issue, and I could trade more actively.
I got myself in trouble in the past with margin accounts.
 
zdreg said:
Shouldn't the platform bar you from exceeding the allowable leverage?
More...

Yes, at that moment. But most platforms aren't great at predicting the future so they don't bother ;-)
 
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