The best solution would be something like this and it would satisfy most of the conflicting parties: a)Minimum account requirement for daytrading on margin should not be a prohibitive $25,000 but a more reasonable $10,000 b) 2:1 margin for accounts between $10k and $25k c) 4:1 margin for accounts above $25k As far as the new regulations are concerned, I feel kinda guilty that I am benefitting with 4:1 margin at the expense of the newbies, who are knocked out of the game cos they don't have $25k capital (several years ago, I started with considerably less than $25k and can these days make at least $2k on a good day ... if I was starting out as a newbie this September, the new SEC rule would have prevented me from becoming wealthy). But I tell ya something, the people running the SEC will have a deathwish if they do a U-turn on the 4:1 margin. This 4:1 margin is absolutely incredible and will give me so much more flexibility to make even more money, so the SEC bastids better keep it.
def, I agree it is a double-edged sword. But with strict discipline, its merits outweigh its demerits.
candletrader, I wouldn't disagree but there are a numerous professional fund managers (not to mention a few noble laureates) who got burned by over extending themselves. I suspect that those with less experience will be hurt more often by the misuse of margin.
Again, I totally agree with you that those with less experience will be hurt by the imprudent use of margin. But enhanced margin is most definitely a big plus point for my trading. One would need a high degree of discipline to best capitalise on enhanced margin provision. Such discilpine will be somewhat lacking in the overconfident or emotional trader.
DEf- I do agree with you about leverage, but I'm leaning more to Candle on this one. Most $ managers who get burned with leveraged don't do what we(daytraders) do. What happens with them is they get illiquid. They can't dump their positions. A good summer read is "when genius failed" (i think thats the title) about Joh nMerriweather's hedge fund...not only were they leveraged to the hilt, they thought they couldn't lose, and nobody would/could take the other side of trades that big. Candle is right ...with discipline, a daytrader should have no problem dumping 2-5,000 shares of QQQ or CIEN or whatever. Of course if you're swinging overnight, your risk goes up, but if you use QQQ or DIA or SPY you're not gonna get halted or gap down 20%
Yes, Def's points are most certainly valid with respect to the shifting of large quantities of stock by hedge funds and / or the taking of overnight positions. But Uptik correctly (imo) suggests that for an individual daytrading intraday and with sound discipline, margin should be viewed in a positive way and not a negative way.
Back to the topic of a lobby: I think the brokers are already ahead of the curve on this one -- not many of them support this ruling; Even the NASD has proposed an alternative (they have lobbyists) Datek http://www.sec.gov/rules/sro/ny9948/nicoll1.htm IB http://www.interactivebrokers.com/download/comment7.pdf See also the originally posted objections to the rule (ones that were submitted to the SEC within the allotted time frame) http://www.sec.gov/rules/sro/nd0003nc.shtml and http://www.sec.gov/rules/sro/ny9947nc.shtml They, the brokers, have a bit more punch in the well monied halls of special interests. i wrote them for support -- they told me they had already complained. Have you tried you own legislators? I don't think the SEC can be lobbied -- those folks are appointed -- so the legislature is the place to target. I tried soliciting the help of a number of members of the 4th estate (Barrons, WSJ, NYTimes, Washington Post, LA Times, etc)-- at least my legislatlors sent me back form letters -- the press ignored me. I think i'll try again though. good luck regards/greg
Redart11, Since first seeing your thread I noted possible interested groups as I surf around the web. Here are some I found, mostly mentioned in newsarticles about the new SEC daytrading rules. Electronic Traders Assoc.(ETA) - Bill Lauderback Dimeplay28 mentioned that ETA might not be around anymore. Lauderback was quoted in an article as a representative of this org. Maybe the ETA is inactive but Lauderback at least still has his name listed as a contact by some news organizations. DAYtradersUSA - Richard V. Rueb Being a newbie, I had never heard of these orgs. and don't know anything about them. Just thought I would pass this on to you.