Question about Day Trading buying power

[StevieP]

Quote from Bolimomo:

That's right you can buy and sell over and over and over again within your DTBP in any given day. But in reality... unless you are very, very, very good and you trade every minute movement of a given stock/market, you would typically only do X amount of dollar volume.

Your trading platform is programmed to not let you initiate position that is over your DTBP. For example, if you have $100,000 DTBP and GS is now at $120. You want to short 1000 shares of GS ($120 x 1000 = $120,000). No. Can't do. Your order will be rejected. You can short 800 shares of it. ($120 x 800 = $96000). But sometimes, you may get caught in a short squeeze (like last Thursday). GS went to $140. Now you face a margin call with your short position. ($140 x 800 = $112,000 which is over your DTBP).

Usually getting intraday margin call is not that likely. As long as you close out your position before end of day you will be all right.

Leverage is a double-edge sword. Use it wisely! You can get rich OR GO BROKE 4 times faster.

Thank you, that is wise advice and I will heed it. I don't plan on using much or any of the leverage. My goal right now is geared more towards learning to trade well rather than looking for any specific profits. I figure if I learn to trade well that will come. I was concerned though after reading something that led me to believe that the daily BP was a total of all trades. I am glad to now understand that is not the case.

 

[spindr0]

Quote from StevieP:

So in reality you can trade an unlimited dollar amount as long as you don't go higher than your buying power at any given moment.

That's true but as others have pointed out, you don't want to get near your intraday limit. If you do, your account will be issued a margin call. You'll then have five business days to deposit funds to meet the call. Until then, your account will be restricted to an intraday buying power of 2:1. If the call isn't met by the 5th business day, your account will be restricted to trading for 90 days on a cash available basis or until the call is met. So give yourself some buffer b/t your position size and the limit.