Does IB Permanently Peg Accounts as "Daytrader" Accounts?

Discussion in 'Retail Brokers' started by version77, Jun 26, 2002.

  1. I would like to know if IB permanently pegs accounts that have
    (or are now having) a lot of daytrading activity as "Pattern
    Daytrader" accounts. I can't get a straight anwser on their
    discussion board at their site. Anyone know the answer to this?

    And if so, does this mean you cannot now swing trade with less
    than 25K in your account? Your account is only good for daytrading?
     
  2. No, they don´t. As soon (even intraday) as equity is above 25 k: Daytrades Left = Unlimited
     
  3. Cool. So as long as you only do 3 daytrades in any 5 day period
    while your account is under the 25K, you can trade with margin
    (as long as you haven't had a margin call) and when your account
    goes back over the 25K again you can have unlimited daytrades.
     
  4. Fohat

    Fohat

    No, with less than $25k only daytrades are limited (max. three in 5 days), swing trades are unlimited. You can do as many swing trades as you want with less than $25k account.

    Cybertrader, as I understand allows a trader immediately to change their account classification (day trade margin to margin and vice versa), but ONLY one time per 90 days.
     
  5. So all you would lose is the 4X margin? Or could you still daytrade
    with 2X margin if you went and changed account classification
    more than once in a 90 day period?
     
  6. Fohat

    Fohat

    With Cyber, you can change your account classification only one time per 90 days.

    If you change from day trade margin to margin, you can still trade with 2x margin(loose 4x margin), but with additional restriction of no more than 3 daytrades in any 5 days, for the next 90 days. Because, you can chage your account classification only after 90 days or more after your last change.

    For IB policy on this, send them an e-mail.

    Meanwhile, why don't you consider trading options(or futures)? IB option commissions are only $1/option, almost the same as for trading stocks. The $25k rule does not apply to futures and options. SSF (= Single Stock Futures) will also be available in the near future. There are plenty of alternatives.
     
  7. Fohat, thanks for the information you have given. Quite helpful.
    I am just trying to find out if it is easy to go back and forth
    between daytrader status and non-daytrader status. I guess it
    isn't as easy as I imagined. I don't like the 90 day restriction. IB
    policy is probably close to Cyber. As you know, I am asking a lot
    of questions on the IB board also.

    I have considered trading futures but then I would have to set
    up 2 accounts which would be a job. I can always add more $$$
    to my IB account, which apparently is what I am going to do now
    that I know I don't want to lose my daytrader status at IB.
     
  8. def

    def Interactive Brokers

    version, you don't have to set up two accounts, just upgrade to the universal account. Money will be swept automatically into the securities side during the overnight processing.

    The following quote may help answer your question:
    "Consistent with the new margin rules, on the above dates, if an IB customer's margin account falls under $25,000 and the customer has day-traded three times within five days, the customer will not be allowed to open new positions until the $25,000 requirement is restored, or the five days have elapsed. A day-trade is defined as the purchasing and selling of the same security on the same day.

    Although the NYSE and NASD rules impose other "pattern day trader" account restrictions, our customers will not be affected by these restrictions because we believe our current margining system complies with these additional rules"
     
  9. What I meant by two accounts was having a backup account
    for the futures trading. I realize IB now has the universal account
    which is totally awesome.

    With IB, do they also have the 90 day restriction where you can
    only go back and forth once every 90 days between daytrader
    status and non-daytrader status? Or is IB setup so you don't
    have to endure this fate? :) If IB is set up this way, then that is
    totally awesome too.
     
  10. def

    def Interactive Brokers