I know that is kind of a stupid question, however, with this new margin rule, it is all over for me. I will be unable to raise the funds required nor will i be able to produce any income with the new rule. With under 25k, no margin at all, no shorting, and you can't even trade with cash. Unbelievable. I started trading in May and am getting better, but my only other option is to borrow money off credit cards just to meet the stupid requirement, and this will be dead money. I don't really need 4 to 1 margin, i trade with IB and have been happy up until now. I think this new rule is an outrage, and a blatant attempt to squash the little guy, i though this was America. Since I will not be able to produce income at all because of the new rule, i seriously thought of filing a lawsuit against the SEC and/or the NASD on grounds that I will have to file for bankruptcy due to this rule. I invested a lot of time and money in equipment and setting this business up and now i will not be able to continue. I would have to go more into debt just to fund the acct, and i would not be able to let the acct. drop below 25k, because i would be restricted again. This is an unfortunate situation, and I know there are a lot of newbies out there who may be in a similar situation, and will never be able to show their profit potential with this new rule. Again, i know filing a lawsuit sounds corny, but i know a lof of you have at least thought about it. Any thoughts or suggestions would be appreciated. By the way, I need not be reminded of all the alternatives to intraday trading/scalping, like options, futures, swings, i have read enough about all the ways to try to get around the rule, and it's futile. Comments are welcome.
Vinnie As Bill Clinton would say" I feel your pain." A top NY or DC law firm would eat up your bankroll in one day on just the filing fee's alone for such a lawsuit. I recommend you give Bonds a try through IB or other futures until December until single stock futures come on board. They going to be outrageous, 100 share contracts, 20% margin and I promise you the volume in the big cap ones(csco,intc,aol,ge) will be enormous. The NYSE and the NASD will be sorry they ever heard of the Pattern Day Trader scheme. They will literally be adjusting their closes to the futures closes. They've fooked themselves good on this one. Just be patient. IB as you know is now advising their clients to take their business to other instruments and bypass stock trading.
Thanks traderx21, i kind of figured that a lawsuit would be totally unfeasible, i more less wanted to at least get a discussion going on it. Maybe if someone would do it pro bono (lol). Anyway, you are right, the ramifications of this new rule go a lot further than just margin buying power. Frankly, i 'm pretty upset, i am an intraday player, i scalp and play momentum, 3 min moving averages, pup breakouts, all that good stuff, just started expanding my basket stocks, and increasing my shares. I like the freedom of cash at any time, and rarely hold anything overnight. It's a shame, but for me to jump into futures and options, that's a whole new world, and quite frankly i think my best option unfortunately is to quit. As painful as that is that is the reality. I may raise the funds necessary to meet the stupid mininum, but that is a tough decision. Hey, i've got a good idea, buy put options on all the brokers (schwab, etrade, ameritrade, goldman, merril, morgan, and nite), i might double my money and get the amount necessary to trade, lol. Because they are all going to be hurting when volume dies.
Vinnie, The new 25K rule is certainly without merit, but I believe any lawsuit would be most difficult in succeeding. Trading stocks is not a right guaranteed by any law. Furthermore when you use margin to trade stocks, you are borrowing money from institutions, which have the right to enforce whatever rules they require. Keep in mind that many other countries have severe rules regarding stock trading. Britain for example has a 0.5% tax on ALL stock purchases. Can you believe that?? Makes me glad I live in the U.S. Htrader
Vinnie, I raised the question of a class action suit in another thread. You might find the responses interesting. Here is the page with my initial post: http://www.elitetrader.com/vb/showthread.php?s=&threadid=1551&perpage=6&pagenumber=15 I am not pursuing the idea right now because I am working to get my account above $25,000.
why don't you guys write a letter to president bush? this rule is a serious intervention in the free market access. the point is, that in a few years or even earlier there could be another regulation that makes it even more difficult to trade for the little guy. everybody who currently is NOT affected by the 25K-problem should consider this - there could come a time, where also you guys will be kicked out of your business.
You wrote: "Why don't you guys write a letter to president bush?" I'm tempted to respond: Because someone would have to teach him how to read first. Jim
The new margin rule didn't just appear out of nowhere. It was proposed over a year ago and the NASD gave the standard "reply period" for feedback from the trading community. I'm not defending the NASD, because I think it's an unbelievably ridiculous rule, but the time to do something about it was then and not to start griping now after it's too late.
that's right - but there are probably lots of traders who started trading this year and learned about the rule when it was already too late.