The SEC just tightened the margin rules for the NYSE and Nasdaq. You now have to have $25,000 in your account to use margin. Which means you can't short unless you have a margin account. For those with the requirement, you'll be able to use margin by 4x instead of 2x. link is here -> http://www.cnet.com/investor/news/newsitem/0-9900-1028-5070768-0.html?tag=ats I just have to say thank you SEC, for killing the liquidity in the market, putting greater risk in the hands of the few and killing our economy. IMHO
Between SuperSoes, SuperMontage, and now this new rule you would think that the gov't/Nasdaq is waging war on daytraders. All we do is create liquidity! They will realize they've made a mistake in a couple years when volume is non-existent and spreads are back to early 90's levels.
This is really a blow against the many smaller online traders. They have no chance to short. However, a swing or position-trader with less than 25K in his account could still use options instead of going short the stock. Wonder why they referred to the Atlanta shooting again in the article - this guy lost much more than 25K bucks - presumably on a margin account.
Just found out that we have 6 months before this ruling becomes reality. That's 6 months for the little guy to increase their portfolio to $25k and 6 months to complain to your congressman/woman to say how absured this ruling is. So, get out there now and do something!
The brokers I work with require an open margin account to trade options. I don't know if this is a regulation or just brokers discression. In either case the potential impact of this regulation change is huge! Basically the SEC is saying that people with 25k in their acct. are 4x smarter than those that don't! Try and swallow that!
I also urge all traders to write your congressmen and complain about this further move to hit traders. How insidious that the SEC couches it in the "protecting traders" BS. However, as I read the article, this will apply only to daytraders, as the almighty SEC defines us: "The rule defines a day trader as someone who buys and then sells stock in one day, known as ''round trips,'' four times over a five-day period, unless those trades comprise less than 6 percent of the trader's total trades." So it seems that a swing trader can still have less than $25K and use margin as long as he or she doesn't make 4 daytrades in a 5 day period. So I guess you could do 3 daytrades in a 5 day period, as well as have a swing position open, and avoid the restriction. But still....give me a break.
For anyone who is interested, Here is a link for contacting your congressman: http://www.house.gov/writerep/ And your senator: http://www.senate.gov/contacting/index.cfm Kirk
All I can say, if I might steal a line from a Steely Dan song, "the fix is in". This is extraordinary and scary. These people are a bunch of pecker-excuse me -pinheads.
Yes this is outrageous. These fatcats are looking to squash the little guy trying to make a few extra bucks...while the bigboys get away with pilfering millions(ex; Millken, Rich et al). While a family man tries to pick up an extra 25 bucks here and there they want to protect him from himself...gimme a break..what in the world are they scared of..Now they will let some poor sucker who does have $25000 make $100,000 bets on a stock...crazy..I hope the brokers will weigh in on this and use all of their influence to see this does not come to fruition. They stand to lose a number of customers from this reg. I have already written my congressmen and hope you all will do the same.I will prob write more later as I am really pi**ed about this. Thanks for lettin me rant. BP
Maybe someone willing could write up a form letter that the rest of us could just copy and paste into an email to the congressman. I think many more people here would be willing to send that in than to think up their own arguments. The form could be posted on other trading sites too for all to use. Anyone...? This won't affect many people including myself, but I think it's in everyone's best interest to try to keep the newbies trading.