A NastyGram from TDA

Discussion in 'Options' started by probe1957, Jul 22, 2011.

  1. Looking for advice and input here before I call TDA tonite.

    My account balance is just less than $25k. What are the chances they will actually restrict my account? What I have been doing is buying and selling options contracts, usually in the same day, apparently with too much frequency. I assume my options are:

    1. Deposit additional funds to bring my account balance to $25k.
    2. Stay in trades overnight.
    3. Don't do more than 3 day trades in a 5 working day period.

    Anything else you guys can think of? Here is the email from TDA.


    The FINRA currently defines day trading as purchasing and selling, or short selling and purchasing to cover, the same security on the same day. A pattern day trader is defined as someone who makes four or more round-trip day trades in a five-business-day period, unless this activity is less than 6% of total trading activity in that period.

    Your account activity in your TD Ameritrade account ending in XXXX fits this pattern day trading definition and is subject to increased equity requirements.

    Minimum Equity Requirement
    Pattern day trading accounts are required to maintain minimum equity of $25,000 on any day in which day trading occurs. Accounts with less than $25,000 equity will be issued a day trading minimum equity call and will not be allowed to day trade. If a day trade is executed when the equity is below $25,000, your account will be restricted to closing transactions only for 90 days, or until the equity is brought up to $25,000.You can increase equity by depositing additional funds or consolidating assets and continue trading as usual.

    Day Trading Buying Power
    Day trading buying power is equal to Self-Regulatory Organization (SRO) excess (which is calculated as the equity in your account at the close of business the previous day, less total SRO requirements), multiplied by up to four. Accounts that exceed day trading buying power will be issued a day trading buying power call.

    If your account is restricted because of a past-due day trading buying power call, you will be limited to trading on a cash-available basis only. Consider your individual financial position and goals before making an independent investment decision. Please refer to the Day Trading Margin Requirements in the Margin Handbook that's available on our secure Web site for further details, or contact a Client Services representative. For a complete copy of the amended rules, visit the FINRA Regulation Web site at www.FINRA.org.

    If you have questions, please call an TD Ameritrade Client Services representative at 800-669-3900, 24 hours a day, seven days a week. Please enter your account number or UserID when you call so you receive the best possible service.

    If you would prefer to write to us, please send us an email once you've logged on to your account and selected "Contact Us" at the bottom of the home page. (For security reasons, we only provide account information via email when your inquiry is sent from our secure Web site.)

    John B. Bunch
    John B. Bunch
    TD Ameritrade
  2. I got one just like that about 3 years ago. If you get into swing trading the problem goes away.
    I make a day trade every time I lose (because a stop kicks me out), but most of my winning trades are 2 days or more. There are plenty of big moves out there. Just back up and look at a 20 day chart instead of a 2 day chart and do the same thing you're doing now.
    Also, you'll probably make more money doing this since you'll be trading less. Those entries can be tricky, and commissions and slippage adds up.
  3. Magic8


    Don't day trade. Then you won't get these little notices.
  4. 100%. it's a strict rule.

    the restricted status is very annoying. let's say you get restricted but then the account goes back up to 25K+. you are fine, right? yes, but if the account dips below 25K (in those 90 days) you are back to not being allowed to trade.

    i think there is an option you can invoke by asking them to reset the restricted status. this can be done once every 6 or 12 months I believe.

    trade smaller size: ~6K each day
  5. Don't shoot the messenger. TDA is just complying with the law.
  6. Yes, but OTHER firms look at it as a silly reg. Many will overlook it unless you really go wild.
    The big question is: how often is the SEC or FINRA going thru the expense and trouble of auditing the B/D ?
    I'll bet very infrequently.
  7. ammo


    you can daytrade options on the es,its a future,not a stock,so the daytrading restrictions are removed,it doubles your commissions,but if you get long or short using put or call spreads,the risk is limited
  8. Let me know what those other firms are. I am currently with ThinkOrSwim which is now owned by TDA. I may need an out.
  9. Can you share with us which firms do not enforce PST rules?
  10. the firms that are about to be shut down? a US broker does not have much choice here.
    #10     Jul 23, 2011