As someone who started with less than $25k and who can now make that in a week, I feel sickened by the SEC. It is preventing people from their shot at trading, because daytrading in a cash account will soon not be allowed. Perhaps the less well-capitalised should grit their teeth until December... futures on stocks are introduced then... maybe someone can look into whether these instruments are subject to the Stalinist $25k rule.
candle, daytrading in a cash account will soon not be allowed I know with the new ruling this applies to under $25K accounts, do you know if it also holds true for ALL cash accounts of any size? I ask because one of my daytrading accounts is an IRA and I have considerably more than $25K in that account (which I've been trading as a cash account for years).
Cash accounts will be subject to 3 day clearing, unlike margin accounts, which have auto-updating of buying power. Currently anyone with over $2k can have a margin account. From September, only people with over $25k can have a margin account. People with less than $25k will be relegated to a cash account... you will effectively be able to trade your capital ONCE in a cash account. For example, suppose you have a $20k account and are therefore placed in a cash account. Once you have traded stocks to the value of $20k you will be allowed no further trades for 3 days until your funds are cleared (e.g. after 4 trades of $5k, you are done for the day, and will not be allowed any further trades for 3 days). This makes daytrading totally impossible for people with under $25k. It also makes swing trading virtually impossible, because of the potential to be stopped out a couple of times within the same day after re-entering. So for folks with less than $25k they can: 1) wait until december and start trading futures on stocks 2) trade options free of any SEC contraints 3) trade index futures (single lots to be safe) Basically people with under $25k can no longer feasibly trade stocks. So much for the USA being the land of the free!
At IB you can only trade options in a margin account. So if someone has less than 25K in their account their account will be converted to a cash account and they can not trade options either. Correct? This all sucks!
El Caz, You should still be able to trade options. I do not know of any $25k regulation for option accounts. The $25k rule applies to stocks only, to the best of my knowledge.
Maybe it's just an IB thing? I was told that you can only trade options in a margin account. No margin accounts less than 25K therefore no options. Maybe Def can tell me the truth about it? You there Def?
Margin isn't disappearing altogether just because of the 25k rule. If you don't daytrade stocks, there's no effect on your use of margin.
In case you guys haven't seen, you should check out the post about Echotrade. They are giving guys 5-to-1 on a $10,000 account, and also no software charges until next year. Courtney