what i cannot understand is: daytrading futures will not be affected by the new rules. cme even just lowered the initial margin for the e-mini nq100 - now you can move about $30K with $5.250 in your account - or even more with lesser margin when trading the mini sp. so - what is the REAL reason for this dumb rule? PROTECTING somebody from getting blown? of course not. those who have less than $25K and lost so far and will now move to futures trading will lose the rest of their money even faster - so what? the only reason - as we all already know - just can be: the big boys (e.g. nasdaq-members, etc.) don't want us any longer to play the funny game. i also trade with less than $25K - i just started few months ago - but i already learned a lot and i for sure will survive in this business - although i don't know whether with stocks- or with futures-trading. whether you have the 25K or not - what should worry EVERYONE of us is the fact, that such a strange kind of regulation (i would even say discrimination) had a chance to come around at all. if there is one - there can come another one. what if this 25K-rule will not bring the expected effect? what if they come up with a 100K-rule next year? how many of us will then be kicked out of business? what if they come up with a similar rule for e-mini-trading? i don't wanna be considered as paranoid - but you probably should think about this for a moment. it's of course a derision to tell us, they just want to protect us. and i - as an austrian - thought, that this would be the land of the free ...
Candletrader Not everyone can just run to the bank and "top off" their account with another $10,000.00 or so on a whim. Plus you can't daytrade short positions like you indicated in a "Cash Account". Matter of fact you can do very little in a cash account.Except Hope. If you even get stopped out this is considered a day-trade. This KILLS TRADING as many of us have come to love. And the sad thing is the community of traders is just waking up to what was done on the threshold of implementation. WE HAD NO ONE ON OUR SIDE LOBBYING FOR US. This is a done deal with us as the recipients of the screwing I'm probably going back to Bond,Currency, and Crude Oil futures trading. This was all done in the "spirit of protecting us from ourselves". Bullshit, it was done in the Spirit of getting us small time Pro's who broke down the doors of the Exchanges(including Nasdaq)(The stock exchange for the next 100 Years with 20 Years off for good behavior) and the Spirit of killing direct access before it spread to the masses.
Tradex, I have never said that you can short positions in a cash account. Please inform me which of my statements I said that in. I have never suggested that people should run off to the bank, and top-off their account to $25k UNLESS they are intent on using margin.
Once you are marked as a PDT, you must maintain $25,000 or more in your trading account or it will be reverted from MARGIN to CASH status. Once an account has been reverted to CASH status, the account is outside the scope of the new SEC MARGIN rules. The SEC regulations relates to margin accounts, and the forthcoming rule on margin defines daytrading in the context of margin accounts. Cash accounts remain unaffected by the regulations, and existing practices by brokers with respect to their cash accounts(i.e. real-time buying power) will remain unaffected. ********************************** Notice of Filing of Proposed Rule Change To Amend NASD Rule 2520 Relating to MARGIN Requirements for Day-Trading Customers (f)(8)(B) Day[-]Trading (i) The term "day[-]trading" means the purchasing and selling or the selling and purchasing of the same security on the same day in a MARGIN account except for: a. a long security position held overnight and sold the next day prior to any new purchase of the same security, or b. a short security position held overnight and purchased the next day prior to any new sale of the same security. (ii) [A "day-trader" is any customer whose trading shows a pattern of day-trading.] ********************************** NOTE THAT the definition of a "daytrader" in ii) is linked to the definition of "daytrading" in i).... and i) ONLY talks about trading in a MARGIN account. The rule is couched totally in the context of MARGIN accounts. Existing broker practices with respect to CASH accounts remain unaffected. Moreover, the title of the regulation relates categorically to MARGIN. Cash accounts obviously have nothing to do with margin accounts. So if brokers currently allow intraday trading in a CASH account (i.e. if they offer real-time buying power) there is NOTHING in the new SEC margin rules which will preclude them from continuing to do so. The SEC margin rules stem from its concern that leveraged smaller accounts have, over the last year or two, incurred losses far in excess of their original asset value, resulting in numerous cases of negative equity. For those of you who think that the SEC is ALSO attempting to prevent people trading with their OWN CASH balances and using existing broker practices on real-time buying power (thereby facilitating active intraday trading of cash accounts), I ask you to step back and put things in context. Such a conclusion would imply that the SEC wants to kill active trading per se ... that is clearly NOT their intention. The SEC simply wants to prevent LEVERAGED intraday trading on what it (arbitrarily) defines as a small account, in order to curtail what it perceives to be excess systemic risk in the financial system. So, TradeX, if you have less than $25k, do not lose hope. You can open up a CASH account with a broker with real-time buying power updates, and trade (on the long-side) to your heart's content (so long as the aggregate value of your open positions does not exceed your cash account balance). Example: If TradeX's account value is $10k, you can use a CASH account to scalp a stock like EXDS all day long from the long-side(through a broker with real-time buying power).
Candletrader I think we are arguing over apples and oranges here, it's bad period, Rapist, Murderer, Serial Killer, Pattern Day Trader it all has the same ring to it. We've been unfairly and CLEVERLY LABELED. Remember back in 87' they tried to pin it on the Futures Markets, now they can point out they have eliminated "uninformed gunslingers that have exacabated the recent market declines". I did a recently did a dream parody on what recently has transpired on tradingmarkets.com on their TM World boards entitled Massive Roundup of Securities Industry Figures, it is under the Securities Industry Issues With Larry Connors Board. If any of you email me I will try and email it back to you.
Candletrader, Are you absolutely sure Cybertrader will allow unlimited long side trading in a cash account? I don't mean just updating your balance, I mean clearing the trade. I was under the impression that ALL brokers who are subject to regulation T (cybertrader included) had to clear trades in a cash account 3 days after the trade. (T+3) It's always been that way. As far as I know the ONLY way to daytrade with less than $25k is with a prop firm.
huby, You should read Candlestrader's posts for the last couple of days and you will find answer to your question.
Huby, Yes, I am sure. Rather than me going over old ground (as per MichaelDay's comments), I suggest that you (Huby) phone them and personally confirm that they allow trading in a cash account on a real-time buying power basis. Regulation T stipulates a maximum clearance period for cash accounts of 3 days. Regulation T also has 'good faith' exceptions, whereby your real-time buying power broker will take care of the administrative issues and allow you to trade on a cash account basis without waiting for T+3. Some brokers don't as yet have this facility e.g. IB. Others do e.g. Cybertrader. Enough said. The issue is closed from my side. Things will become clear over the next week or so, when brokers decide to actually post their take on these regulations on their websites (somewhat belatedly).
candletrader is correct.Actually most brokers should accomodate this type of trade.Its what is called same day substitution.As long as you dont exceed net equity in your account it should be ok.