Cash transactions in margin account

Discussion in 'Retail Brokers' started by KEF, Nov 24, 2002.

  1. KEF


    I am doing 2 types of trades, normal day trades, and 2-3 day swing trades.
    My swing trades usually involve stocks under $4 (un-marginable).
    I have over 25k in a margin account.
    When I liquidate my overnight holding, funds are not available from this sale until the next day. Some brokers have said that I would not have funds available for 3 days.

    yet......Ameritrade allows you to use funds right after sales are complete.

    Are is Ameritrade wrong? Are their direct access brokers that allow this?
    I don't want to have two accounts. (Ameritrade for swings, and a Realtick broker for day trades)

    This seems to be a stupid interpretation of cash rules

    thanks all for replies
  2. alanm


    Stocks that are "not marginable" should still be held in the margin section of your account (type 2), even though they have a 100% margin requirement. At some brokers (like Waterhouse), you have a selector when you buy stock to choose whether to do so in your cash (type-1) sub-account or margin sub-account. If you chose cash, the restrictions mentioned would apply, just as if you bought them in a cash account. You should choose the margin sub-account to avoid this in the future.

    It's amazing that I had a long argument with a branch manager over some IPO daytrades I made. It never occurred to him to mention that the only problem was that I chose the type 1 sub-account. All I had to do was buy the stock in the type 2 sub-account. I have no idea why this ability even exists when someone has a margin account.