After selling an overnight position can you daytrade?

Discussion in 'Trading' started by Option Trader, May 18, 2009.

  1. Thinkorswim doesn't let you (saying there is a FINRA rule disallowing this). Is their understanding of this correct? I don't think other brokers make such a restriction??
     
  2. piezoe

    piezoe

    I don't see any explanation of this policy on the TOS website. Have you tried to get someone on their Trade Desk to explain it in detail? This is a problem that occurs in IRA's, is that right? I would suggest it has something to do with not being able to borrow in an IRA and technically when you sell something the money generated is not available right away. Where i think the TOS software may be at fault is that if you have already enough free cash in your account to make a purchase, but prior to that purchase on the same day you sell something, their software, i think, defaults to assuming that the proceeds from the sale are being used for the purchase. This seems to not be related to the 25K minimum for day trading, is that right? This may be an accounting software problem, and if so, you should be able to get around it by placing your order through their trade desk.
     
  3. If it was executed in a margin account with over 25K, the margin should be freed up after the sale.

    If the account is not flagged as a PDT account then it needs to be.

    This is the policy at a few firms, I do not know specifically about ToS.

    A. Is it a margin account?
    B. Do you have 25K plus in there?
    C. Is the account flagged a PDT account?
     
  4. ascheer7

    ascheer7

    An IRA accou nt is a cash account. If you hold an overnight position in a cash account (IRA or other cash account) and yuo seel it the next day you cannot use that cash until after settlement.
     
  5. The OP has not made any mention of an IRA?
     
  6. It's a margin account, there is over 25k, it's a PDT, yet they have this policy. They are making this policy apply equally regardless of B & C.

    Response to Piezoe: This is NOT an IRA account. By calling the trade desk they will allow you to place the trade yourself online AFTER you assure them what your intentions are--and you still are warned before sending the trade that if you close out the trade that day you get a day-trade margin call.
     
  7. piezoe

    piezoe

    This does not seem right! What is going on there?:confused:
     
  8. If you have a link, I would desparately want to show it to Thinkorswim. They've had this policy for several months already & it's very restrictive.
     
  9. This is what I found on MasterTrader website just now using a Google search: http://www.mastertrader.com/CustServices/FAQs/MarginFAQs.asp

    I sold an overnight position today. Why isn't my buying power updated?

    Your account begins each day with a certain amount of excess equity (day trading buying power). Per FINRA rules, this amount cannot increase. However, it may decrease intra-day due to trading losses sustained in your account. The decrease in buying power due to losses is calculated to prevent margin calls in your account.

    See also...
    http://www.assent.com/marginfaqs.php
    sold an overnight position today. Why isn't the buying power on my account updated?

    Your account begins each day with a certain amount of excess equity (Day Trading buying power). Per FINRA rules, this amount cannot increase. The decrease in buying power due to losses is calculated to prevent margin calls in your account.

    My buying power (excess equity) is significantly lower than what I think it should be. Why?

    Keep in mind that the sale of overnight positions will not free up buying power during the day, but will be updated over night...
     
  10. If it's a margin account with more than 25g at all times, you can day trade to your hearts delight, subject to a max of 4:1 margin intraday. Brokerage firms can have less lenient margin levels than Reg D allows.


    Basic pattern day trader rule summary:

    An NASD & SEC rule that applies to anyone who buys and sells a particular security in the same trading day (day trades), and does this four or more times in any five consecutive business day period. A pattern day trader is subject to special rules. The main rule is that in order to engage in pattern day trading you must maintain an equity balance of at least $25,000 in a margin account.


    http://www.patterndaytraderrule.com/nasdrule2520.html
     
    #10     May 18, 2009