I was under the assumption that virtually all "fulltime" daytraders have accounts much higher than 25,000... If so what is the problem? If you are a trader that has an account under 25,000 and can make a good living please let me know (equity only)? Anyway, for those that are affected I am sorry... I could use the 4 to 1 margin.
Ray,,, I have yet to trade one share ,,,yet to feel the exhileration of what it is like to make 100,,,or 1000,,, or better in a day of trading....but,,,,I have been spending every moment that I can,,,,,learning and reading every bit of expert information that I can,,,,listening to every online comentator say what he has to say,,,,absorbing every piece of valuable info that I think will help me succeed in this endevour...I am treating this wholeheartedly as a business,,,,nothing else..... I guess you can categorize me as one of "the masses" that are raising a family,,,also building a business of my own.....but I know that I want to do this.....And I want to do it right......I will not be starting out with unlimited funds.....So,,,it feels in a way that they are taking some type of leverage,,(not that I would use it anyway) away from me...I am trying to learn this in a way that I don't go in and drop 15,000 on my learning curve....Elite Trader has tought me invaluabe lessons already....Things you don't learn in a book... I'm sorry about the "masses" that have gone in and lost money not realizing what they were getting into.... BUT,,,,I shouldn't have to pay for it....It's not so much the ruling that is forthcoming,,,,it's the fact that if this goes through,,,,,what else is the govrnment going to do to possibly restrict traders such as yourself...And I can refer back to a recent comment that somewhat says " they are not protecting the individual that goes into a casino and blows the family savings"....SO WHO IS THIS RULE REALLY PROTECTING ????? Give a man a dollar,,feed him for a day,,,,,,, give a man knowledge and you feed him for a lifetime...... Make any sense ??
squirrel just for your info good work on treating this like a business. It's the only way to really do this. I was heavily trained by a "Market Wizard" for awhile and still lost money. It took some time for me to find something that fit me. Even with all of my training I lost money. I refused to give up, and would seek out any trader I could find who was consistently profitable. Soon so was I but it was due to not ever accepting failure. Licking my wounds and moving on. Never give up rtharp
Ray we all can use the 4-1. However I believe the 4-1 will not overcome the loss of liquidity we will endure. It's hard enough to find an ecn these days. As Dustin mentions we need newbies--to juice the system-I'm a newbie. And now I'm scared--I've put in the time and work-I'm aware of the risks and rewards--as good fellows like RTharp advise-- and now in a sense our jobs are at stake. What, indeed, is next as squirrel mentions?? Because there will be a next.
Well, bad news. I just researched the SEC and NASD sites, and found that this rule was actually proposed last year by the NASD, and has been approved by the SEC. I just pored through a whole bunch of letters to the SEC by traders in response to the rule proposal dating back to early last year. It appears that despite many protests by traders, the rule was ramrodded through. To make matters worse, contacting members of Congress is pointless now, as they don't vote on SEC rule proposals, and also since the rule has officially been approved by the SEC. It appears that for traders who are capitalized under $25,000, you're going to have to finagle the system to avoid getting slapped with the "pattern day trader" moniker and losing your margin buying power. For instance, you can daytrade 3 times in a four day period. You can also hold an overnight position, liquidate it the next day and reenter for another overnight position without it being considered a daytrade. And of course, you could continue to daytrade unabated as long as you don't use margin.
z--It's like when I was in the nightclub business-In NYC-the mayor waged war against us-hard-closing down many clubs-forcing people like me to get out-this was not a strip club-He had free rein as he knew politically the public would follow his crusade-after all how many votes can nightclub people provide so we were easy prey.--- How much pull do we traders have as a group-zip. This is the scary part.
This certainly is a hot topic, and should be. I will not be bothered by this new reg..other than maybe having to consolidate an account (If I have a really bad six months)The problem I have with this is that the insiders are trying to eliminate people from participating fully in a public market. All should be welcome to participate in a public market. It is the poor powerless average citizen having his neck stepped on once again by his benevolent and protective government.I shudder to think where I would be had I not been able to go short when I started out. So what is the small trader gonna do now? I will tell you ..He is gonna get a second or third mortgage,,,go to the credit card companies or whatever it takes to get to that $25,0000 number. It is scary but I belive this is what will happen. And that 4x margin..that will soon be a thing of the past..they knew they would have to offer something to prevent a groundswell from most traders over this..but you watch..soon they will be saying they "misjudged the impact" of 4x margin and will return to the 2x margin rules. I wonder what will be next..You have to have $100,000 to be margin eligible? Sound crazy..it is not as big a jump as from 2,000 to 25,000. I just don't like the idea of 2 sets of rules...depending on the amount of money you have. We should all be free to make or lose our money as we see fit. This stinks! BP
zboy you said that "you could continue to daytrade unabated as long as you don't use margin." what exactly you mean with that, if i dont use a margin account? or you mean if i dont use my margin buying power i could daytrade more than 3 times in a four day period. help!
Zdex, As I read the rule proposal, it applies only to margin requirements with regard to daytraders, since presumably "investors" could still use margin with less than $25K equity. Therefore, you could still get a margin enabled account and daytrade all you want, provided you don't use any of that margin. However, you would be limited in this case to long side trades only, as shorting requires the use of margin. For shorting, you would be limited to 3 daytrades in a 4 day period. Likewise, you could only daytrade the long side using margin 3 times in a 4 day period or unlimited times using cash only. There are a whole bunch of end-arounds and considerations that would have to be employed by traders using less than $25K, and seems to me to be a huge headache for the brokerages who will have to scrutinize their customers' trading records to see if they trigger the "rule".
I don't want to be misunderstood. I am a constitutionalist (almost a libertarian), I feel that a non-broker minimum dollar amount on an account is as wrong as it gets, and just another sign of "big" gov.. On the other hand I also feel that "fulltime" traders should have the ability to use 4 to 1 margin (as long as the brokers are willing to offer it). SO, net/net this "law" is wrong; is it unconstitutional? I am not sure, but they are impeding on the rights of a particular group while allowing others to move on. They are measuring ones rights and faculties without trial. When I started I opened accounts that ranged from 20,000 to 25,000. I now try other brokers by opening small accounts. I guess it will become more cumbersome to do this... Additionally, the equity markets in this country HAVE to stay as free as possible. This action scares me because of what may come next... (Example, I don't smoke, I don't like smoke, and there are some cases where the tobacco companies are liable form a cival standpoint, but the government is (was?) trying to "milk them" out of business, and WHAT'S NEXT? alcohol? McDonalds? Microsoft? You? Me... Frankly, the government should stay out of such issues, and leave them to the markets and the people that elected them.) As for me... I could use the 4 to 1, and want to. PS. I don't think it is going to affect liquidity, I still believe that if someone has an account under 25,000 they are not trading that much anyhow (Either the number of trades, or the number of shares.). In fact I double all of my positions with 4 to 1 margin (my trade risk model will allow this). So I will be adding quite-a-bit of liquidity.