I am starting trading soon and was about to open an account with IB, but can't quite make the Reg T minimum equity requirement. My solution is simple: I'm taking the Series 7 and opening an account with Echotrade. Their commission structure is virtually the same as IB, and their execution speed is => from what I hear. Plus their software offers a lot more features. Maybe once I've saved enough to fullfill Reg T I will look at coming back to IB. But for now, the new regs have cost IB another customer. Rushman
IB, as of today, has the following answers in its FAQS. 1) Will IB provide 4-1 margining? No, IB will continue to require and enforce margin in the same manner. 2) Can I day trade in a US stock cash account with IB? Yes, however, stock cash accounts may only trade with settled funds. Answer 1) remains unchanged. They have changed answer 2) from what it was yesterday ... yesterday the answer ran something along the lines of "No, you are not allowed to daytrade in a cash account" ... could IB's new stance be the first step in the direction of having real-time buying power in their cash accounts? (like CyberTrader already does)... only time will tell.
"2) Can I day trade in a US stock cash account with IB? Yes, however, stock cash accounts may only trade with settled funds. " It is just a smart answer but nothing changed. If you have 20.000$ in account and use all the money to buy INTC shares and the same day sell your INTC shares, you would have no more buying power for 3 days. Let's call it "daytrade once a week in cash accounts"....
As someone said a while back, the daytrading community has been too dumb, too cheap and too poor to hire the necessary lobbyists to fight for our rights. I hope everyone here that cares will at least write to their Congressmen and register their dissatisfaction with the latest SEC rulings. It may not work, but most certainly won't if we don't try. I also hope that IB and their peers are just waiting for a little `trader unrest' before they make their next move. If the discount brokers would band together and sue the SEC for its capriciousness and favoritism we might have a chance. The combination of the traders speaking out and the brokers suing as a group seems to have real potential. The rulings are so self-contradictory and absurd that any critical view should put them to rest easily. If there's one thing lawyers are good for it's assessing the logic within legal documents. These new rulings are so thoroughly devoid of logic there should be little trouble nullifying them. All traders, even those with larger accounts benefit from the large community of small-account traders that have been estimated to number in the hundreds of thousands. They reduce the cost of commissions and trading by encouraging the growth of discount brokers. They add volume and liquidity to the market. They increase volatility so there are more profits to be had. They reduce the spreads so everyone gets better fills. They add to your numbers so the SEC will think twice before ruling against you in the future. Daytraders are good for just about everyone, except perhaps the Market Makers. And the vast majority of daytraders have small accounts. Please add your voice to the chorus so we can turn back the invaders. Let's not ignore history ... ``They came for the Jews, but I wasn't a Jew so I didn't speak up.'' This is serious stuff. If they get their foot in the door with such lame restrictions now, there will be no stopping them in the future. Richard
Dawnrazor, Thanks a lot! The reference was to unscrupulous invaders that weren't stopped because people didn't speak up until it was too late. It's a commonly used reference and isn't meant as a comparison to Nasizism. Trading is my livelihood, so it's very very important. Getting the message yet? Richard
OT: Well it looks like someone has to get off his or her arse and do something. I do some consultancy work with organizations that feel that they are being suppressed. You all sound just like they do... My answer to them is to; "Do something about it." Yapping here isn't going to get anything constructive done. Create a web page where traders can register and sign petitions, try to rally traders (big and small) around the idea of a few sick days, That will REALLY wake up the brokers, and they are the ones that can put pressure on the SEC. You could use a site and petition to "haggle" CNBC, CNNfn, and Bloomberg to "really" address this issue. Try to arrange for a couple of traders (small) and a couple of broker reps to do an interview in the financial media (TV would be great, but even a paper or magazine). Call the "money" magazines and etc.. These guys would love to have a ready-made story. Even a well placed add in Barons, or IBD will go along ways (Raise cash for this (paypall) on your new website, I will pay my share for small constructive actions.) IMO it won't reverse this rule, and I seriously doubt it can be reversed by traders alone. Your goal should be to "modify this rule" and most importantly stop additional restraints. This rule wouldn't be so bad if they did it on a scale that started at 0 margin at 10,000 (but can daytrade cash) or so, and went to 4 to 1 margin at 50-60,000. The problem you all have; in regards to my post is: I am not directly affected by this rule. The only way that I am "touched" is by IB not offering more credit access. So I will be going to another firm in due time. If I was directly affected I would stand up and fight. I will even assit someone; Make calls, write letters, and etc. Just as a precaution from future rules, and my own strong desire for justice. Anyway, if anyone wants to shut-up and step-up-to-the-plate you have my support.
Could not use IB browser at all today. Received message "Rejected-Potential Pattern Day Trade". E-mailed IB and they said it was a programming error. My account is less than 25K but again I was not allowed to make any trade today period. Rules only went into effect today. Did this happen to any of you too? I trade the QQQ's but I think after today I will be switching to the E-Mini instead. These new day trading rules are ridiculous, we must never forget that this in America, the land of the "FREE". I am originally from South Africa and left during the apartheid regime. These anti-freedom rules enacted by the SEC and backed by the BIG BOY brokers are a characteristic of a police state. How could congress and Bush allow these rules to take effect? Beats me. These rules dont protect the little guy.
Its not over yet. Keep up the questions and perhaps just perhaps, IB will listen to their customers. The latest: Dear Trader, You are confusing the free riding rule with this. Stock settlement is currently 3 days. The stocks go through the Depository Trust Company first and funds are either debited or credit from them on the 3rd day. We have chosen not to credit your funds until we actually receive them. Management is looking at this, it is possible that this maybe temporary. Stock settlement is going to be in 1 day soon enough. The industry is gearing up for that. Stay posted to the home page for any news. Thanks, Dan IB Trade Desk