I know this forum is not really for inexperienced day traders, but I kind of need someone with experience to give me some advice.. The problem: I have had a trading account for about 10 years..I recently decided to become more active, and yesterday (Thursday) I began trading. I funded my account with some Sirius shares I have been holding for a year or so... Anyway, I traded in and out of Arris 3 or 4 times, along with a couple of other securities...Today I learned that my account has been temporarily restricted, 90 days.. They said I was "freeriding" because I never signed the freakin margin agreement 10 years ago. I know I should have known better, but it was a long time ago, and just plain forgot. So my options are a) Borrow/transfer 20k, deposit in account, satisfy the purchases, lift the restriction, withdraw the 20k, pay back to lender or transfer funds back by Thursday. b) Wait for the settlement date, let the trades run their course, fax in the margin agreement, use the 90 day trading restriction to kick myself in the mirror from 9:30 to 4 M-F. or C) Any reccomendations? I am curious what you would do? I really want to keep learning how to trade, but borrowing 20k doesn't feel right, even if it's for a day. Any and all advice is appreciated. I have been reading your forums, and I have alot of respect for the members here.. Todd A
It sounds like your problem is that you triggered the pattern day trader (PDT) rules, not that you forgot to file a margin agreement. PDT rules come from the SEC, and there is no way around them. If you want to trade actively with a small amount of capital, your only alternative is to trade something other than securities, such as futures or forex. I suggest taking it easy...
Todd, Who is that broker? How big is your current account? Did you ask your broker if you can now add the margin privilege by signing the margin agreement? Did you also ask if they will let you withdraw money from your current account?
I would think you could sign a margin agreement even if your account has been open for a while. I was planning on doing that next year.
there was another gent run into the same problem and I forgot the correct term, thank for reminding. Not sure about margin agreement part, I signed anything they put in front of me and they still froze my account. Nothing you can do since you can't touch your account until 90 days from now and of course you don't want to deal with that broker again...ever. Looking back, what I would do is apply for various accounts online, which broker quickly get back to me will get my business and of course you don't have to trade big, put in some money to trade and hang on until revenge day. After 90 days call them up and tell them you want to liquid the account and send you the check, or if you want the account the same way then just transfer-in-kind to your new account...sweet p.s. or paper trade for now http://www.elitetrader.com/vb/showthread.php?threadid=59895
http://www.sec.gov/answers/freeride.htm http://www.sec.gov/answers/freeze.htm http://www.sec.gov/investor/pubs/tplus3.htm
I have just under 60k with Harrisdirect, who was just acquired by E-trade. I am only keeping 5-10k in cash for now, so I couldn't cover the 20k because you can't sell securities in the account to cover purchases. I don't keep that kind of coin in my checking account. I could possibly transfer funds from another account, but it might not be enough, (I traded again today, so the number is bound to go up), and honestly, it seems like a lot of hoops to jump through. I thought maybe I could just sign the margin agreement and fax it in, but according to "Regulation T", it's already water under the bridge. Since I am not a pro, I don't know if they are full of crap or if I really violated some rules. I paid for the trades in cash, or so I thought. It looked simple to me, buy, cash debited, sell, cash credited, buy again, etc...I didn't realize I was violating this settlement issue. Thanks for the helpful links...It's kind of a crappy way to get started..And by the way, they said that I didn't trigger the day trader criteria because the account wasn't a margin account. Maybe that's why I only got restricted and not frozen. So do you really think I should take my business elsewhere, and this is BS, or is this really no big deal? i was kind of comfortable there, but they don't have the trade size on their streams, which has been very interesting to me after reading maverick's posts in the tape thread. Does the 90 days prevent me from moving my account? Apparently, I can still trade, as long as I don't buy before the previous trade ( buy and sell) settles, unless, I guess, I keep more of the account in cash. Thanks again.... Todd Dear Harrisdirect Client, Note: Federal Reserve Board Regulation T requires us to place your account on Temporary Restriction until we have received $XX,XXXX.00 for your previous buy order. This means funds must be on hand in your account before a new commitment can be accepted. Also, securities to be sold must be held in the account in good form. If payment is not received by Harrisdirect by 12/15/05, we will be required by federal regulations to extend this restriction for 90 days.
Todd, they are not giving you a line. Give them a call on Monday morning. Harrisdirect has a responsive support staff and if they can't help you right away, they will get someone on the phone to tell you exactly what you need to do to get where you want to be on the account. Thats better thean asking here.
I called them tonight and the support guy kind of tried to explain the Reg T rules to me. He admitted that the lights were out and he was trying to figure it out on his calculator, but in the end it kinda made sense to me, even if I wasn't technically trying to freeride. I think you are right though, I think I will call again on Monday, and talk to someone who doesn't work the friday night shift..Hopefully, I can just send in the margin form, and they lift the restricted status. Otherwise, I will have to sit tight until March. By the way, are most of the members here PDT, or is that a given? Thanks Todd
I think we all are PDTs here. I have an account at Bright Trading so I never have to worry about those sort of things happening to me since they put up their capital. Check the SEC website again. It says you can ask for a waiver from your broker for that so they dont freeze your account. Even though they dont have to give it to you if you ask nicely they might just do it. Anyways you can find the rules at Title 12, chapter 2, part 220.8 (d) Extension of time periods; transfers. (1) Unless the creditorâs examining authority believes that the creditor is not acting in good faith or that the creditor has not sufficiently determined that exceptional circumstances warrant such action, it may upon application by the creditor: (i) Extend any period specified in paragraph (b) of this section; (ii) Authorize transfer to another account of any transaction involving the purchase of a margin or exempted security; or (iii) Grant a waiver from the 90 day freeze. Here is the link to this rule. You'll find it at the bottom of the page relating to your "freeze" http://frwebgate.access.gpo.gov/cgi-bin/get-cfr.cgi?TITLE=12&PART=220&SECTION=8&YEAR=1999&TYPE=TEXT