Zany, I'm not defending it. I simply stated that when ANYONE in life "borrows" money from someone, be it a firm or an individual, that person who does the borrowing doesn't get to make the rules. This applies across the board. That was the only point I made. Traders are not entitled to anything, and they sure as hell are not entitled to do whatever they want on borrowed money. Other than that, as I've stated before, you can do anything you want in my book with your own money. In your case Zany, that means shorting HLF.
I know Mav, but its like I pointed out.... these guys are STILL borrowing money. I mean truly.... what is safer(?)... shorting 500 HLF overnight with borrowed money, or opening and closing it in 5 minutes with borrowed money to make $100 on a 20 cent move? The 5 minute play is much safer for both the broker AND the trader. Short 500 overnight and what happens when Oprah says she enjoys a good Herbalife spinach and dehydrated bone-marrow milkshake? Another thing someone pointed out is say you are trading with 20K (ie 80K buying power) and you open 3 long positions.... and put stops under them. The market heads south and all 3 trigger their stops... that individual's account is frozen for 90 days. How the hell is someone gonna learn how to trade? Most Millennials probably don't have 25K sitting around that they can park and not use. Besides... borrowing money and losing it MAGA's. Thats what our country was built on.
Zany, You keep reading my chart wrong. I'm not talking about the efficacy of the rule. I'm talking about the OP first post on the thread. It's not about Risk, Oprah, daytraders, your mommy, Millenials, etc. When you rent an apt, lease a car, borrow money from a bank or yes, trade on margin, you play by the rules of the proprietor of that capital. Outside of discrimination against race, gender or ethnicity which is prohibited by the interstate commerce clause, the owner of the asset can properly decide how they want to lease out their asset. THAT is what makes America Great! Furthermore if the OP had a serious argument, he would first start with portfolio margin accounts with a 100k minimum. Those accounts were created SPECIFICALLY for the purpose of risk mitigation. Aren't ALL traders entitled to that? I'm not saying they are. But the OP should start there and work his way down or at least include them both.
Nothing in this stupid American rule makes America great. It did not use to exist in trading. Was not America great then? Emotive argumentation such as this are plainly childish. The supposed reason was to protect traders from themselves but of course that is garbage. There was a big crash in the markets in 2000 and the Sec wanted to be seen doing something - and taking action against the fed was not in the cards. This rule (PDT)does not exist outside the states because other countries saw that it was plainly a stupid rule put into effect to "show we did something" after the horse has left the barn and run a mile down the road. There is a rule that all traders must be treated EQUALLY - small or large. That applies across the board to news releases, and order execution. The rule violates this basic principle. Spurious arguments like lenders can do anything simply show the vacuous thinking that permeates the board. Large accounts also borrow and the rule doesn't apply to them. You throw in a red herring ("lenders can do anything") and drag the discussion down the alley and mug it, and degrade the board in doing so.
vac·u·ous/ˈvakyo͞oəs/ adjective having or showing a lack of thought or intelligence; mindless. ___________ I'll be damned....I learned another new word. Good one to toss around ET.
Not sure it's still the case but I do know back in 2001 you could trigger PDT daytrading only options in a cash account with Datek. Is that still the case today ?
This is really the gist of the whole rule. JSOP is a little off about 25K cash account, but he is correct about the reasoning of the rule. Fat cats say its to "protect" the investor or trader. This is patently false. Maverick74 says its to protect the firm from having to service the little guy. (not sure that sounded quite right..anyway). Maverick74 is right, but screw that reasoning. He is either a big guy as a trader or making money from the trading industry as a seller of trading service. The other guy, from lime brokerage, states the typical hogwash from and insider in the bizness. Both of these guys have been around a LONG time, and can be grouped into the Fat Cat bunch. Just an assumption. Put them at the beginning of their trading careers and I would bet one of my account trading units that they would have a view that is 100% the obverse. The PDT rule, along with the aspects of Dodd Frank that crushed the deposit prop firms (from which I made most of my trading money in the 2000s), and the crushing of leverage and other regulations that basically closed the advantages of retail Forex in the US, are ALL examples of the large guys seeking to eliminate competition from smart, hungry, small guys. This is the essence of all regulation in the financial industry. It's the influx of the Govopoly as it applies to trading (thanks from one of my mentors). It seeks to concentrate capital to the top. Once aspect of concentration of capital is restricting the freedoms of those sharp (but probably less capitalized or even smarter wanting to start with small capital) new traders that stand only to benefit from the advantages of leverage, mark to market accounting, same day or next day settlement, k-1 schedule E simple tax forms, interest rebates, and on and on and on and on. So, traders today have to adapt and figure things out. Yes, this thread makes me long for those early days. I started out a Lieber and Weissman in 1998. Those of you older guys might have known Gene Weissman. In addition to trading, I used to go around giving talks to trading groups about the advantages we had over retail traders. This was before the PDT rules and all of the other nonsense. In fact, I lost a few stakes at LWS before getting employed by one of their sub group managers, then I killed it, so to speak. The climate now for a beginning trader like I was 20 years ago absolutely sucks compared to what I had. Leverage is necessary for a disciplined trader. Or lots of non-leveraged cash. The restriction of leverage, and restrictions on the behavior of traders only serves to limit the number of trader who will be upwardly mobile in the industry and challenge the capital reserves of the FAT CATS. In every business sector, the largest risk any company has is a threat to its capital. If you don't believe this is also rampant in the financial industry you have just not done your homework and have not spent enough time thinking about how this part of the world works. Do you think the govt or financial firms care if you go bust? they dont. Most financial firms who will be a conduit to you clearing trades want your action ( commissions) and don't care about your equity. They want you to grind and grind it away. What the gov't doesn't want, and want large players in the financial industry dont want is a small group of guys or single traders that can make an impact on their capital. This is the only significant reason PDT, and other "reforms" have been legislated in the financial industry. Before entering into any business, perform your due diligence, and then you learn. Regulations seek to limit opportunity and keep the status quo in place, not to "protect" small entities from their actions.
Absolutely agree. PDT rule and the capped leverage and now banned retail forex by SEC are all about sweeping everybody's accounts into mutual funds with the Big Banks/Brokerages.
NB: We posted the INCORRECT EMAIL in the first thread post. Correct email is: MSP@mspchicagolaw.com (NOT mps)
NB: We posted the INCORRECT EMAIL in the opening post. Our correct email is: MSP@mspchicagolaw.com (NOT mpschicagolaw.)