"BTW, intraday BP is 4:1 for PDT accounts over $25K (not 2:1)." Your intraday buying power is 4:1 as long as it does not violate Reg T. If you do, you can get a "free ride" violation.
What is the meaning of the sentence below ( Most brokers will not let you zap your account (even intraday) and keep trading. ) excuse me for my poor english!
If you lose a lot of money during the day, they will reduce your buying power. In other words, your unlimited loss scenario should not be possible. And yes, you're probably liable if you fail to properly guard your password and someone loses your money for you.
Thank you a lot for very kindly answer! I understand most broker system will make buying power reduce immidiately when loss in trading. and I believed margin buying power is 2 times larger than cash balance in margin account. but u said BTW, intraday BP is 4:1 for PDT accounts over $25K (not 2:1). I dont understand why 4times larger than cash balance? If I have $500,000 in account, I can buy $1000,000 only, not $2000,000.
I read the website and realize the buying power is 4 times of cash amount. But that is government law or rule. I would like to know that the all brokers must follow this rule, or brokers can make own rule within the government rule, or not. For example, government said the margin buying power is 4 times of cash account, but some brokers can make their own rule such as margin buying power is 2 times large amount of cash amount, or not? I am looking for your earily reply!
Use "timely" instead of "early" Also say "I am looking foward to" instead of "I am looking for" New sentence should read "I am looking foward to your timely reply" 5yr
When determining buying power there are several figures you need to look at. You are alway held to the greatest requirement: 1> Reg T req.- 50% (gives a 2:1 BP) 2> NYSE req. - 25% (gives a 4:1 BP) 3> house req. - ?? (if applicable) A brokerage house may increase the minimum margin req form 25% across the board or on individual stocks. Most competitive brokers do not do this any more. Schwab used to require 35% across the board and up to 80% on certain individual stocks that they felt had a significant credit risk. When an account is opened, you will have a BP of 2:1 based on the Reg T excess equity, also called SMA (special memorandum account). What makes SMA hard to understand is that it does not decrease with market depreciation. It will decrease however once a position is closed for a lose. With an account that maintains several open positions at all times (closing some and opening new ones) SMA will tend to become inflated, showing a "high water mark" of the accounts market value. As SMA becomes inflated it will no longer be the most restrictive and you will then see the NYSE req come in to play as well as the 4:1 buying power.
As I said, you should have 4:1 intraday buying power for a >$25K account at any reasonable broker. You generally will have only 2:1 if you want to hold a position overnight. How and when each broker enforces that rule varies - you need to check with the broker to be sure. In the case of IB, for example, you have to meet the 2:1 requirement at about 15:45 ET. So, with 100K cash, you can take a 400K position, but you have to sell at least half of it (down to 200K) by 15:45. You can buy back 200K (total 400K) again after about 16:00 and hold it overnight. I think you probably have to do the same again the next day if you want to continue to hold the position, since it's considered a new position. That is, I believe the max you can do with $100K is: Day 1, 10:00 Buy 4000 XYZ @ $100 (total position 4000 = $400K) Day 1, 15:40 Sell 2000 XYZ @ $100 (total position 2000 = $200K) Day 1, 16:15 Buy 2000 XYZ @ $100 (total position 4000 = $400K) Day 2, 15:40 Sell 2000 XYZ @ $100 (total position 2000 = $200K) etc.