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IB: The Party Is Over

  1. IB doesn't want daytraders at their firm.

    They decided not to allow daytrading in cash accounts.

    They decided not to give 4 x margin to daytraders.

    Other brokers allow daytrading in cash accounts and give 4 x margin to daytraders.

    The party is over at IB. It's time to move your money to another broker.
     
  2. as long as ib keeps on offering the stable technology - fast executions and the lowest commissions around - i guess the party is not over.

    and daytrading in a cash account - come on - you won't get happy with it. if you can't short, it would be like you can't use your car when it's raining.
     
  3. Restricting trading in cash accounts means that they will lose all daytraders with less then 25.000$ in account.

     
  4. Oh and I forgot...

    Daytraders with more then 25.000$ in account will leave because they don't get 4 x margin.

    It's clear. IB doesn't want daytraders at their firm.
     
  5. >Oh and I forgot...

    Yeah...what you forgot is that you don't speak for other traders, that's what you forgot.

    >Daytraders with more then 25.000$
    >in account will leave because they
    >don't get 4 x margin.

    Uh...I'm not looking for 4x margin. I rarely use the 2x that they offer me now. Not every profitable trader is balls to the wall (in fact, I'll bet there are more profitable ones who are more conservative).

    >It's clear. IB doesn't want daytraders
    >at their firm.

    IB's got a pretty good history of being good to the little guy. They were vocal in their opposition of this rule (were you?). I'm betting that after a period of watching, if there is an interpretation that stands which allows daytrading in a cash account, they will adopt it. There is much chaos and differing interpretations at the moment and if I were them I'd want to see what shakes out before putting my a** on the line regulation wise.

    For now, why don't you just speak for yourself and move your money rather than attempting to claim you know what the rest of us will do.

    JB
     
  6. There is no new rule regarding cash accounts.

    According to their interpretation, also with the old margin rules, trading in cash accounts would not have been legal.

    Of course what I write is my opinion. And my opionion is that if you are a daytrader, you should switch to another firm. I already did. And I won't come back until they don't offer me a more "daytrader friendly" deal.

    IB's interpretation of the rules is ridiculous. There is no reason not to give us 4 x margin and daytrading in cash accounts. Other firms do it. So don't tell me it is not possible.

     
  7. If high leverage is what you crave, you can either go pro, or just trade futures. You'll get 10:1 in either case.

    Actually, I propose that IB allows 4:1 day trading margin and 2:1 for overnights. That would give most of us what we're asking for, and reduce the overnight risks for them (and us). [For futures margin is obviously different than for stocks, but since the question was regarding leverage ... ]


     
  8. Please... the only good part of the new margin rules is 4 x margin for daytraders, also overnight.

    Why do IB customers get only the bad parts of the new rules?


     
  9. >There is no new rule regarding cash
    >accounts. According to their
    >interpretation, also with the old
    >margin rules, trading in cash
    >accounts would not have been legal.

    There have been numerous brokers that in the past have interpreted the rule to say that there is no daytrading in cash accounts so this isn't a new battle. The new margin rules are forcing some brokers to be a bit more creative and push the edge of the cash account interpretation envelope, but don't try to say that in the past one could simply open up a cash account at any old broker and daytrade (T-0) it, because it ain't so. I tried it when I first started and was pissed when I found out that I needed to open a margin account (I had no plans to learn to trade on margin)

    >There is no reason not to give us
    >4 x margin and daytrading in cash
    >accounts.

    There is a very BIG reason not to give 4x margin -- it's called RISK. To say "there is no reason" just makes you look silly. In any industry, some firms are credit aggressive and some aren't. IB apparently isn't but they have a very solid reason (they're here...Harbor isn't)

    >Other firms do it. So don't tell me
    >it is not possible.

    Didn't say it wasn't possible. It's possible alright -- possible to end up like any number of firms that have crashed and burned through the less than careful extension of credit.

    JB
     
  10. I find it hard to believe that someone with less than $25,000 can actually day trade full time and expect to make a decent living anyway. Even if you were to make 400% return on your captial, after taxes and health insurance, you can expect to take home less than $50,000 annually. What would happen if you had a bad year and made only say 100% return on your capital??? It's seems to me that the better option would be to keep your full time job, keep your $25,000 in a cash account, and swing trade for extra cash. Perhaps I am too conservative. . .
     
  11. concerning the 4:1 issue: i guess the reason why this is a part of the new rule could be, that they want to compensate the liquidity that gets lost by kicking the little players out of the game. or just because they can show at least one positive aspect on the new rules.

    anyway - 2:1 margin for trading stocks should be enough. for example: if you had an account with $20K and traded with 2:1 so far - and did fine - and you come up now with $25K and keep on trading 2:1 - where's the problem?
     
  12. silvius sez "What would happen if you had a bad year and made only say 100% return on your capital??? "

    Hey bro, I'll give you all you want if you guarantee me that in ONLY doubles in a BAD year. You da man!
     
  13. I would interested to know if anyone on this thread is trading with full time with less than $25,000 account and making 75K+ after taxes. If it is possible, I may reconsider quiting my full time job!
     
  14. IB is a bit conservative (and a bit quirky-look at IB's chairman's view on trailing stops). Give them time and if everthing works out, we will see them take steps to remain competitive.

    The only thing that bothers me is that they are not totally reliant on the retail side (they have a huge institutional following) as opposed to CyberTrader, etc.
     
  15. Silvius,

    I started several years ago with around $20k and was living on McDonald's level earnings for around a year. That original $20k was generating me profits of as high as $30k a day during the bull market, and I have been able to generate a few very profitable days this summer, including several $10k days.

    All of this came from a measly $20k life savings from a few years ago. If you view trading as a business, I think you will understand that good things take time to develop. Had I started with $20k today, I would not be given the flexibility to trade on margin as a result of these rules. I feel very bad for all the newer people. Please do not try and be smug about things. Some of the people with less than $25k are being denied the chance to earn many multiples of what you are getting in your $75k job, if they stick at it for a few years and treat it as a business.

     
  16. I think it is OK when IB is risk challenged.
    I feel better for my money there.

    Yes, the new rule is not fair. Life is not fair.
    The big players liked us very much during the bull run because we helped them. Now, because they know this poor market could be in trouble for a few years, they'd better have us elsewhere.

    It is going to be difficult for newbies. I am sorry you did not start earlier, while it was much easier and took less money. But that the way it is. Stop whinning, try to find the money. Life is not fair and you don't accomplish much by crying each day on this board.
     
  17. Candletrader,

    I was not trying to be ‘smug’, but merely suggest that it is not prudent to try to make a living by day trading on a account size of less then $25,000. If a trader was confident that he/she could pull 75K out of the market every year, than coming up with 25K should be a minimal issue (home equity loans, cash advance on credit cards, sell your car, work a second job, etc). At 75K per year you can repay your loans in 5 months…..Correct? The point that was trying to make is that quitting your full time job to day trade in hope of earning the same livelihood is just as risky as borrowing 25K in order to qualify as a pattern trader. So why is the 25K rule being viewed as the major hurdle?
     
  18. LionSec is the closest to reality. This is the end of the game. Put hey thats their problem too, you are going to see volume contraction of 10-15% (on a permanent basis) over the next few months. This sounds like a broken record I know (my other postings), but most of us as Active but Smaller traders are doomed. WE HAD NO LOBBY WHEN THE CHIPS WERE DOWN. PERIOD. Many will find there execution frozen and a Popup advising them of their "suspension" and to verbally contact the trade desk some AM. Only because you had "only" $18,000.00 in your account and that STOP that was executed in JNPR yesterday put you over the top of your weekly "daytrade allowance". In other words you will also be penalized for being a SOUND Trader. You guys and girls better wake up and plan accordingly.
     

  19. oOoO"AP:NEW YORK,N.Y.Aug.24,2001;Manhattan Bureau:Mary Jo White,N.Y.Southern District Asst. United States Attorney has announced the most sweeping arrests and conspiracy charges for securities fraud in U.S. history this AM. Seventy Eight people have been charged, fifty seven apprehened so far. Sue Herera was the most surprised as she was collared at the Gristede's all night market on Madison Ave. where she had gone to pick up additional midnight snacks before supposedly launching some early AM London Liffe Single Stock Futures Sell Programs. Ron Insana was picked up by the Gatehouse at his lavish Pocantico Hills estate where he gone to hound the night watchman on and overdue margin call for Ciena that he felt might reflect on him. Two other conspirators Joe Kernen and Art Hogan were arrested at P.J. Clarke's on 53rd and Third Ave. in Manhattan where they had been swilling beers all evening. The bartender said Hogan got red in the face and yelled Dow 36,000 every fifteen minutes or so. Earlier in the evening he had gotten into a pushing and shoving match with famed short seller Robert Wilson, the bouncer recalled. They were a difficult collar and had to be led away in ankle restraints and handcuffs. Kernen pleaded with the paddy wagon driver to please let him go on his own recognizance, and he was seen whispering into the driver's ear that he "knew of a little bio-tech company operating out of the back of a shopping center donut shop in Compton, California that a has cure for cancer and herpes with more cures on the way". Mary Jo White felt the charge most applicable to them was General and Gross Acts of Stupidity. Surprisingly Joe Bittapaglia was not named in the indictment, White said "we just feel sorry for him, he's obviously a misguided individual who needs all the counseling he can get. Nobody could be that dumb and pass a Series 7 exam". Abby Joseph Cohen was tabbed at Central Park's tony Tavern On The Green where she had just sponsored a Bar Mitzvah for her nephew that reputedly had set her back a whopping $200,000.00. "Thats chump change for me Mac" she snarled at assembled reporters,"plus I was only taking orders" she spit at one reporter. The Bar Mitzvah had a S&P 2500 theme one guest indicated. Not far away Frank Zarb and Richard Grasso were apprehened at swank Le Bernadin where they were dining with their wives and assorted hangers on. Grasso being led away in cuffs was heard snarling to his bodyguard Bruno "make sure those stooges are applauding on the Visitor's Gallery at 4.00 or I'll send you back to one of Gotti's crews in Queens. I'll beat this rap, you'll see. We always do". Frank Zarb outgoing head of the Nasdaq with a $7,000,000.00 payoff remarked as he got into the Squad Car," Hey I'll be at my usual table at 21 for lunch,you can bet on that pal, we got some great new rules coming down later this month and next that pins this whole magillah on the little guys, a genius down in D.C. came up with a great name for the Frame, its called Pattern Day Trading, you just got to love the ring of that, kinda like Serial Killer, sounds like Ted Bundy coming through your bedroom window with a butcher knife, its enough to give anyone the Willies. What a bunch a jerks the little guys are" he went on to remark," any jerk that does homework three to four hours a day, studies charts endlessly, subscribes to services,lives,eats, breathes Trading for their whole life deserves this FrameUp.What a punch of stiffs. They are all going to get what they deserve". More arrests are expected to continue during the early AM hours. Also 358 floor brokers and clerks along with clearing firm receptionists have been named in the Indictment. "The little people will sing first,they always do" White remarked,"because they always do the time first. It's the pattern day traders I feel sorry for, there's tens of thousands of them in this hopper too". Jon Corzine former Goldman Sachs head who bought a U.S. Senate Seat for $53,000,000.00 with suckers money yelled out of his Georgetown townhouse bedroom window "don't bug me about this anymore"to assembled reporters below " I've moved on to the big leagues boys and girls, I'm not in that racket anymore". zzzxo!!ooOO Whew thanks for waking me up you won't believe the dream I just had, the day's the day I have to shut down my quote service for September and notify all my other services that I'm packing it in. I'm going on a long, long vacation and I probaly won't be back.


     
  20. Nothing is over til we decide it is!! :eek:

    Was it over when the Germans bombed Pearl Harbor? :confused:

    :rolleyes:

    HELL NO!!! :D:

    Who's with me? :cool:

    ***************

    What's with some of you? To anyone who thinks it's over, I'd suggest reading up a bit more on some of the best traders of the past hundred years. Jesse Livermore made (and lost) millions after leaving a bucket shop and learning how to read the tape. Nicholas Darvas made (and lost) millions from getting quotes from the paper the next day while travelling around the world as a dancer. I don't need to remind that millions were harder to come by back then.

    I'd further suggest reading this very board and hearing some stories of folks who saved hard just to get to the U.S. and be allowed to trade at all...those who came from illiquid markets and (seriously) oppressive governments. We were born in the candy store folks, the shelves are just getting raised a bit...you're going to have to be creative if you want to play. Nothing is going to get handed to you. This is called adversity, start with what you have and get to work. You'll be a much better trader in the end.

    :)
     
  21. Uh, ktm, I think you mean Jesse Livermore. His pseudonym
    was Larry Livingston in Reminiscences Of A Stock Operator.

    "All gamblers die broke, and most of them become
    degenerates along the way." -advice to Victor Niederhoffer
    from his father

    -v
     
  22. Turok I just love how you can second guess IB's every motive and intention. They're doing this because of that...and they're doing that because of this...

    You don't have a clue as to what they have in mind now or in the future. "Yeah...so what you forgot is that you don't speak for [IB]"

    You're not even a daytrader are you? You're one of those investors, aren't you?

    If IB won't let the under 25K trader trade, then the under 25K trader is going to go where the under 25K trader can trade. That's just commonsense. AND they will lose those who want the additional leverage. Now please don'ttell me again how awfully dangerous more leverage is. We are all intelligent adults here... and besides, you ain't my daddy.

    It's a question as to the number of under 25K traders IB has but I would venture to guess quite a lot were attracted to their low commissions, so it's loosen up IB or BYE BYE.

    Oh...and BTW the additional leverage IS very useful to those who know how to manage the risk. (Like me :cool:

    tradeRX
     
  23. I find myself in 100% agreement with TradeRX.

    IB better wake up and smell the coffee. I will stop trading with IB unless they increase their margin to 4:1

    And smaller traders will be FORCED to stop trading with IB unless they introduce real-time buying power in their cash accounts.

    We are all off to other brokers until or unless IB realises that its stringent rules are just darn so unprofitable for its own bottomline.

    So, IB, its bye-bye to my (substantial) commission dollars :)

    P.S. Def, please pass on my commiserations to the management accountants at IB, who will soon have so little retail work to do that they will be laid off.
     
  24. I've got a small cash-only, IB account and use it to essentially "paper trade" while I'm learning. I've got no interest at this point in doing margin/options. On Friday, IB told me that whenever I closed a trade my funds would be frozen for 3 days.
    Can someone please tell me why IB would adopt this policy? There's no debt or leverage involved in what I'm doing, so why do they feel they have the right to grab a little interest float off my account for 3 days? It just doesn't make sense...
     
  25. Nevermind, I now see the lengthly thread on just this subject...
     
  26. I love the way everyone is threatening IB - "if you don't do this or that I'll take all of my business elsewhere". They know exactly what they want and what risk profile they wish to assume. They have obviously made a risk/reward calculation. If they wanted your business they wouldn't have done things the way they did. I am quite happy with 2 to 1 margin and having accounts over $25,000. If you are not happy with that, then you have your choices to make. They have a big business to run and have to make corporate calculations for the risk they wish to take. They have obviously decided that they don't want either poorly capitalized traders, or highly leveraged traders. Its their business. Your trading is your business. They made their decisions, now you make yours.
     
  27. RX:
    >Yeah...so what you forgot is that
    >you don't speak for [IB]"

    Yeah, I know...most bright people would just figure out from what IB has done that they are a conservative company and wouldn't say moronic things like 'there's no reason not to give 4X margin". Unfortunately, those poor folks need some minor lessons in credit extension risk and I'm proud to be of service.

    Stevene9 said it best:
    >>They have obviously decided that they
    >>don't want either poorly capitalized
    >>traders, or highly leveraged traders

    RX again:
    >AND they will lose those who want
    >the additional leverage.

    Yes they will, but I'll bet the retention percentages will surprise you. Not everyone is interested in 4x.

    >Now please don't tell me again how
    >awfully dangerous more leverage is.
    >We are all intelligent adults here...
    >and besides, you ain't my daddy.

    You've never read me attempting to sway you (or anyone else) from 4x. From IB's perspective, it is simply statistically more dangerous to offer 4x. If they feel like they will make more money with 4x they will offer it. If they feel it will cost them, they won't. I'm pretty confident they will make the most profitable decisions in the long term.

    >Oh...and BTW the additional leverage
    >IS very useful to those who know how
    >to manage the risk. (Like me :cool:

    You're never at risk RX. You clearly need to utilize that 10x at the pro firms. You always know when to get in and when to get out. You're the master, calling the bottoms and polishing those tops. Risk?...you must be kidding, as you can't even imagine what people are talking about.

    >You're not even a daytrader are you?
    >You're one of those investors, aren't
    >you?

    Tell that to my whining broker who lost 10+K per month in commissions when I switched to IB

    JB
     
  28. >"They know exactly what they want and what risk profile >they wish to assume. They have obviously made a >risk/reward calculation. If they wanted your business they >wouldn't have done things the way they did."


    IB is probably still trying to figure out what to do. If you guys beleive that IB "exactly know what they want" than you are naive. IB has become one of the favourite brokers among the small traders and I don't think that they wish to lose those customers. They will wait to see what will their competition do and act accordingly. As def said in one of the discussions: some among their competition have much more political clout with SEC and IB is just being cautios.
    However I do beleive that IB will have to allow daytrading in cash accounts if other brokers do, and they will also have to allow 4:1 margin if they wish to remain competitive.
     
  29. Well said, MichaelDay. I agree with both you and TradeRX on the issue of IB.

    Unless it is part of IB's hidden agenda to revert back to being a broker for institutions, there is no goddam way on earth that IB can expect to remain competitive in the retail arena unless it matches the facilities its competition offers. 4:1 margin is more valuable to me and, I guess, to many others than cheap commissions. Obviously, if we could get both at IB, that would be great ... otherwise:
    1) it is au revoir to IB from the well-capitalised traders who wish to employ strategies to take advantage of 4:1 margin
    AND
    2) it is au revoir to IB from the less well-capitalised (under $25k traders) who can easily move over to firms like CyberTrader and trade long-side cash accounts to their heart's content

     
  30. "IB has become one of the favourite brokers among the small traders and I don't think that they wish to lose those customers."

    In my opinion, IB has established the closest thing to an all electronic brokerage in existance today. I don't think they have sought the small trader, it is just a natural consequence of the system they have developed. They wanted a system that was essentially extremely expandable and where the marginal cost of the next trade is miniscule for them. While no one wishes to lose business, every dollar helps, the small trader is not a market that they specifically went after. None of this really matters though. It is a rsik/reward calculation. If a firm's main target for growth is the small trader, then that firm may certainly decide that the reward is worth the risk. I think IB's gameplan is different. It is to have the cheapest marginal cost per trade. While it doesn't turn away the small trader, I do not believe that that market plays a major role in their growth plans or in their risk profile. Sure they like any extra money they can get from small traders, but not enough to risk their larger corporate structure. I may obviously be wrong about this, but I think they are being conservative and are probably not just feeling their way around this situation.
     
  31. stevene9

    Having a large number of customers/traders looks very nice on the corporate books. I do think that they are "just feeling their way around this situation".
    Which business model is more stable
    1: having 10000 customers that each spend 10 dollars
    2: having 10 customers that each spend 10000 dollars

    Business number 1. is less risky and therefore considered to be worth more.

    Business number 2. may be easier to run but is much more risky. What happens if you lose 3 clients. Your profit margins in that case are down much more than 30%.
     
  32. And could I just add one important thing to this discussion?

    ktm:

    The Germans didn't bomb Pearl Harbor. It was the Japanese!!!

    BSAM
     
  33. Forget it...he's rolling!
     
  34. >Which business model is more stable?
    >
    >1: having 10000 customers that each
    >spend 10 dollars
    >
    >2: having 10 customers
    >that each spend 10000 dollars
    >
    >Business number 1. is less risky and
    >therefore considered to be worth more.

    That conclusion is very debatable and will very much depend on the situation. If the 10000 customers include many, many who are "impulse" customers (for instance buying the latest fad) and a company doesn't have confidence that it can provide the next "fad", then it can be much less risky to have 10 customers who have proven to be in a core business for the long haul.

    I can't say which is "less risky" in this situation, but I can say that many, many traders (particularly small ones)came to attempt trading through fadish expectations.

    Someone said IB is likely watching their competitors and their numbers for answers. I couldn't agree more. I'd be surprised if they don't do what is in their best interest (although one might wonder after reading the Chairman's letter on trailing stops).

    JB
     
  35. BSAM
    No offense,but rent the movie "Animal House" All will
    be calm.Oh and one more quote--I think it's time for a---
    ROAD TRIP
     
  36. RE: "The Germans didn't bomb Pearl Harbor. It was the Japanese!!! "

    If you need to explain it it kind of looses something....

     
  37. today was my first day trading with IB.. i only made a couple of trades to check it out and the interface is actually much easier to use than i feared.. actually, i think with practice it will be much faster than cyber.. i appreciate everyone on this board who recommended IB, thanks..

    the only thing i want to add about 4:1 margin and trading in cash accounts is that until a few days ago we didnt even know that other brokers were going to offer cash account trading.. the rule doesnt even go into effect for another month.. maybe we should see how things shake out before we jump to conclusions and start making threats.. just a thought..

    -qwik
     
  38. michaelday -

    Let me change your example to this one. Suppose you are a finance lender with $100,000,000 to lend. Would you be better off loaning the funds to 10,000 low credit risk people who can't get credit anywhere else, but where you can charge higher fees, or would you be better off lending the money to AAA corporations. It depends on the credit risk, doesn't it. Are junk bonds better than Treasuries. It depends on the risk/reward you wish to take with your money. Your conclusion, in my opinion, is fallacious. It all depends on your risk profile. This is not a mathematical case of large numbers, which is what you are trying to say. Lending to 100 near bankrupt companies is not safer than lending to Johnson & Johnson. I am not saying that traders that use 4 to 1 leverage are inherently bad, but I am saying that they are inherently more risky, almost by definition. Having 1000 traders using high leverage is not less risky than having one trader trading all cash. The theory of large numbers does not apply where the mathematical probability of default is different between the two classes of investors.
     
  39. There is a reason why IB is still possibly my only choice if I am going to trade with my own money as a newbie. No ticket charge and 0.5 cent per share for anything more than 500 shares? Hello? Wake up, there isn't a firm on this planet that can compete with this at least not until you start every position with more than 1500 shares.

    What's done is done, crying about it won't make a difference, plan the next move . . .

    As far as volume is concerned, I don't think it matters, the 100/200/300/400 shares on the TOS never meant anything to begin with. 4 to 1 margin will easily balance out that effect . . . Small potato accounts never moved the market, it never will. I find it funny to hear 10-15% volume gone because people with less than 25K can't day trade. What hell are you smoking can I have some?
     
  40. Vikana said: "Actually, I propose that IB allows 4:1 day trading margin and 2:1 for overnights. That would give most of us what we're asking for, and reduce the overnight risks for them (and us)."

    Stop it Vikana. You are making too much sense! That's a great proposal and would be a very reasonable compromise.






    Now, "May I have 10,000 marbles please"
     
  41. qwik,

    today was my first day trading with IB...i think with practice it will be much faster than cyber

    Did you maintain your cyber account (say, for data feed, charting, watchlists, L2, etc.) or did you drop it and switch all to IB?

    The cost of cyber, realtick, etc. tickets is getting to me but I still need the above features and wouldn't mind paying for the data feed. Debate, debate...
     
  42. I think the point that is being overlooked is no, it's not these "1000 accounts that spend $10.00 per day or 10 accounts that wheel $10,000.00), this is not issue. If you've ever wondered why their customer service is so wretched at IB it's because they have THOUSANDS of accounts that do $40-80.00 per day, and soon most of these accounts WILL NOT BE TRADING ANYMORE UNDER ANY CIRCUMSTANCES ANYWHERE. These new rules threaten the stability of the type of firms traders like us have gravitated. Wherever you have your account make sure they have adequate reserves and insurance. Many of these firms where fast moving traders have been their bread and butter will go out of business in the next few months. This includes a lot of the paid market services as well.
     
  43. traderx21: "If you've ever wondered why their customer service is so wretched at IB it's because they have THOUSANDS of accounts that do $40-80.00 per day, and soon most of these accounts WILL NOT BE TRADING ANYMORE UNDER ANY CIRCUMSTANCES ANYWHERE. "


    so maybe one good thing, for the >25K'rs , they can look forward to better customer service from their brokers...
     
  44. Is this a comical thread or what? LOL

    I am the perfect example of a small guy. I have averaged 35k income the last five years.

    I drive an 18 year old chevrolet caprice. I have several credit cards with no balance. I have no debts, period.

    Whats the point? The point is this rule change is not going to stop me from trading for long. Right this minute, I am 900 dollars short of 25k. Haha (small guy laughter)

    I watch my friends and others wrap themselves in debt and live a much grander life style than myself. But, I know I can't do that. I have to live frugally in order to see if I can fufill my dream--trading for a living.

    Finally, finally my nonflamboyant lifestyle is going to pay off. This rule change is just a small bump in the road in my highway of dreams.

    I don't blame IB for anything. The SEC of the previous administration is to blame. The four to one credit margin is optional Just because someone offers me a line of credit, doesn't mean I will take them up on it. I never heard of 10 to 1 margin on stocks before, but that sounds a little nutty to me.

    Lets face it. This stock market stinks! I mean the nazdaq looks like it has no bottom, and so do the 40 million Americans portfolios and 401-k's who are tanking also. This market is capable of tanking BIG time. I mean a 15 to 20% drop in one day. I believe Chairman Peterffy knows what the risks are, and if he doesn't want to go 4 to 1 right now, thats fine with me.

    To those traders who are smaller than me. Don't give up and keep a positive attitude.

    I love IB. I got some great fills today on Best ECN. It was unreal.
     
  45. Unreal fills on Best ECN? That's because you get the small trader discount, the ECN cuts up to 20 cents off the price if the account is <25k. It's a courtesy.

    For Awesome fills, you need an account < 5k.
     
  46. Ok Traders

    I can't take this anymore!!!

    It'ssssssssssssss definition time.

    LOOSE - not fastened; unbound; make less tight, firm or compact

    LOSE - to suffer loss

    So daytraders can "lose" their money, not loose.

    Thanks
     
  47. interesting read, my two cents.....

    let the dust settle before you all jump to conclusions about how IB manages a business, makes money, cares about it customers, etc. I think IB has a pretty good record for fighting for a level playing field. Who else offers institutional commissions for all clients regardless of size? For starters the brokerage alone is profitable and I assume intends to stay that way. From what I read/hear the regulators are strictly interpretting certain rules and the firm tends to err on the side of caution. Hopefully you can look at the firms past track record before passing judgement.

    As for 4:1 margin. Again, let the dust settle. I've a great deal of experience in volatile markets and have seen firms blow out by extending too much margin. Do you think all traders should be extended 4:1 margin? Sure, I know, you all manage your risk perfectly. Have you ever disobeyed a stop? Got caught on the wrong side of a surprise announcement? Let a loser run, etc. 4:1 leverage could make some losses pretty dramatic in a short amount of time. These losses will have to be eaten by the house (brokerage) putting everyone at risk. Margin is a double edged sword. It will interesting to read the bad loan or write-off sections on the balance sheets of some brokerage firms as we move forward. In any event, perhaps IB will think up an innovative way to extend margin beyon 2:1. (possibly intraday as mentioned by vikana) Who knows? For the immediate future, if your trading is so dependent on the extra leverage, you'll have to pay higher commissions and go elsewhere.


     
  48. My comment is simple. My wife had a question so she logged into IB real time chat yesterday and asked a representative a question. She received her answer pronto. It was good service - end of story. FWIW. :eek:
     
  49. Time to rally around IB? I wonder if we aren't off on the wrong track totally, maybe IB is our only salvation. Of all the posts maybe Vikana's from earlier today was the best? I was thinking earlier this evening about all the firms we rate in the Brokers section, there is probably 70 to 80 of them. And as I stated in one of earlier posts probably 80% of them will be gone in six months. MERRILL LYNCH, SALOMAN SMITH BARNEY, MORGAN STANLEY WON!!! They had the regulators in their back pocket!!! These firms we deal with are like a fly on a horse's ass. They are getting rid of those "firms" and their customers (us).
     
  50. I have to believe that the managers of IB will do what's in their best interest, and since their in business their best interest is to make sure that their customers are happy and that the company is financially stable. Both are important. I'm not a customer yet but if the comments on this board are honest, they sound like a good company to do business with. The prudence they've shown in keeping the margin at 2:1 and their reluctance to (initially anyway) not to allow <25k accounts to "pattern daytrade" are good signs in my opinion.
    I do think the new rule STINKS. Even though it doesn't effect me personally it does effect others and in other circumstances, I could be them. Also, I don't understand the reasoning for the new rule. Maybe someone was worried that the market crash would take a lot of people out of mutual funds and into daytrading and screw up the market? Haven't heard that one yet, made it up myself. It could be some kind of political subjugation thing too. Who knows.
    Rigel
     
  51. 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
     
  52. 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.

     
  53. "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"....
     
  54. 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
     
  55. Let's not ignore the fact that anyone who compares the SEC to the Nazis is a @§$%*&! #§?".
     
  56. 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
     
  57. rfoulk...some good points in your previous post, imo
     
  58. 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.
     
  59. 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.
     
  60. 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

     
  61. I guess they will only change their attitude towards daytraders when enough of us leave them.
     
  62. Datek gives 4:1 to EVERYONE!

    What is IB going to do now?
     
  63. If I open an account of $25K or largerwith Datek I get 4:1 margin and only 2:1 with IB?
     
  64. Actually, you could open a margin account with $2000 and get 4-1. See my other post under direct access brokers.
     
  65. But I would loose that margin on the day the SEC rules go into effect... the 28th of September... right? Or can I keep the marging but just not day-trade with it?
     
  66. The answer to your question El Cazador would be "B".

    JB
     
  67. This is bizarre... so a new trader could get 4:1 margin and go long 8K. He holds it overnight so as not to become a "pattern day-trader". In the morning he wakes up with a stock that has been halted for trade and finds after a day or two that his account is worth zilch. He has lost his $2000.00 and the broker is on the hook for $6000.00. How is this supposed to protect the broker from losses?

     
  68. Stop trading? How long. IB playing with peoples lives without consideration. Time.
     
  69. twende:

    We may not agree with IB regarding their interpretation of the new SEC margin rules/day trading rules, but IB is running a business. Sometimes a cautious approach and/or a wait and see posture is the prudent thing. (Kinda like watching the market.) IB has shown great concern for the small investor and has really contributed to leveling the playing field. I believe it is a bit shortsighted for us to be overly critical at this time. Let's give them a while and see how these new rules shake out.

    BSAM
     
  70. The most important thing you can do is to be on constant alert as for the solvency of these "firms". Schwab laying off 2400 today is just the beginning and not for just layoffs either as I have stated in earlier posts dozens of these "firms" will be going under in the next six months. When one of them puts you on suspension or closes you up for "pattern day trading" say "aw shucks your probably right just go ahead and send me my money, I think I'll do a little fishing". They are probably doing you a favor as if they do go under the Feds don't cut you a check in any five days baby, it takes YEARS to get your money.
     
  71. BSAM - can only agree. Many daytraders are still trading Nasdaq stocks and the new rule hasn't been imposed yet for them.

    We'll have a better picture on the effect of this rule for Nasdaq and brokers by end of September ( unless the NAZ is down at zero anyway until then :rolleyes: )

    From what I can read these days on some european trading-boards, this rule could have nasty effects on certain Nasdaq-stocks, since many european traders started to daytrade them in the last 2 years with comparably small accounts. ( compared to the 25K minimum required as of Sept. 28th ).
    If they don't find a way to circumvent those rules, they might just simply withdraw their money from the US market and start trading options or NEMAX 50 futures, thereby eliminating the currency risk.
     
  72. privateer think again

    IB imposed "The rule" already as of August ,28 .

    I don't quite understand that ,why???
    If the SEC imposed NASDAQ RULE as of Sept,28 why Ib is introducing it one onth earlier :mad:

    Angela
     
  73. They don't enforce the rule on Nasdaq stocks until Sept. 28. Trade away!
     
  74. :D

    I humbly apologize :wtf:

    I guess I misread my email .I will check that out.

    thanks for the info.

    The funny thing is that I mailed my check and will be available in my account on sept,5 .
    since I thought that the date was august,28 ,I did't short from that date :( until today

    I missed out alot

    Angela.
     
  75. Yes the new rules are fully implemented next month.

    But even then, IB won't give you 4:1 or daytrading in cash accounts.
     
  76. I wonder if some people have actually read the new rules and their history before voicing their opinions. Let me correct some misimpressions.

    1 This rule did not originate from the SEC. They promulgated the regulation at the specific request of the National Association of Securities Dealers, who asked for the rule because they were worried about small accounts being able to cover their losses and exposing the brokers to risk. It has nothing to do with protecting small investors from themselves in some paternalistic manner.

    2. The 4:1 margin is available only intraday from any broker except those that require traders to become professionals by passing exams. Margin must be reduced to 2:1 overnight. Therefore the suggestion that IB should offer 4:1 intraday and only 2:1 overnight as a compromise is redundant, as they couldn't offer any more even if they wanted to.

    3. The rule became effective for listed stocks last week and affects Nasdaq stocks in September, so IB had to take some action when they did.

    Don't ask me to defend or explain any of the above. Go to the SEC website and do your own research like I did. You've got to know the rules to play the game and the best way to know the rules is to read them yourself.

    One other thing to think of. If you carry any positions overnight, you may only margin 4:1 on your day trading buying power, not 4:1 on your account equity. If you are not aware of this and your broker does not have systems in place to prevent you from exceeding it you could be liable for a margin call based on the entire cost of all your day trades. IB's limit of 2:1 margin provides you with some cushion against this eventuality.
     
  77. A customer will be deemed a "Pattern Day Trader" when they make more than 3 day trades (open and close a position on the same day) within 5 business days.

    As of September 28, 2001, "Pattern Day Traders" with greater than $25,000 in equity will only be subject to a 25% margin requirement during normal market hours. On each day at 3:55 ET the regular maintenance margin requirement of 30% will go into effect until normal market hours resume the next business day, at which time it will again drop to 25%. These customers will continue to be defined as "Pattern Day Traders" for a year
    after they are last put into this category.

    "Pattern Day Traders" with less than $25,000 in equity will not be able to open any new positions at any time subsequent to having bought and sold the same stock on the same day three times with the last five business days. These customers will continue to be defined as "Pattern Day Traders" until less than 3 day trades are made within the last 5 business days.

    Cash accounts will not be able to use sales proceeds for new purchases until the third business day following the sale.

    IB has implemented these new "Day Trading" rules as dictated by the NYSE and NASD, but due to the complexity of the rules there is much confusion within the trading community. We have spoken directly with NYSE and NASD personnel in an attempt to clarify the facts, and have been advised that the NYSE will issue written clarification in the near future. The following represents a summary of the advice we have received:

    NYSE Interpretation 220.8 (c)/13 states that "Day Trading and Free Riding in a Cash Account are not permitted under Regulation T".

    Customers with less than the $25,000 "Pattern Day Trader" minimum equity requirement may not trade on an unlimited cash basis in a margin account by receiving credit that day for the proceeds from the sale of stock ('instantaneous credit"), but, rather, must wait for the settlement date to receive credit for the
    proceeds from the sale of stock.

    The date of implementation of the "Pattern Day Trading" rules depends upon which regulatory organization the firm is a member of. Since IB is a member of the NYSE, it was required to comply with the NYSE's August 28, 2001 implementation date. Firms, which are a member of the NASD, and not the NYSE, must comply with the NASD's September 28, 2001 implementation date.

    Day Trading rules apply to all US Exchanges and ECNs.
     
  78. IB seems to be claiming that their new handling of cash accounts is a requirement:

    ... Cash accounts will not be able to use sales proceeds for new
    ... purchases until the third business day following the sale.

    Everywhere else I've checked it seems that this is an option left up to the discretion of the brokerage.

    So it looks like IB is up to something ...

    Any suggestions for alternative brokers, since IB doesn't seem to want our business anymore?

    Is Tradescape any good?


    Thanks

    Richard
     
  79. rfoulk,
    i don't see how you can claim IB doesn't want you business.

    First: it states 25% margin after sept 28. In my book that's 4:1.

    Second: it states that it is regulated by NYSE rules. The other brokers may not be. However, it is waiting for a guidance paper from the NYSE moving on.

    Time is needed for the dust to settle.
     
  80. Originally posted by dufferdon

    This rule did not originate from the SEC. They promulgated the regulation at the specific request of the National Association of Securities Dealers, who asked for the rule because they were worried about small accounts being able to cover their losses and exposing the brokers to risk. It has nothing to do with protecting small investors from themselves in some paternalistic manner.



    "The proposals are advanced ostensibly to 'protect the safety and soundness of member firms and ensure the overall financial well-being of the securities markets.' There is, however, no record to suggest that the market is imperiled by day-traders. THE SAFETY AND SOUNDNESS OF THE SECURITIES INDUSTRY ARE NOT FINANCIALLY THREATENED BY ACTIVE ACCOUNTS MAINTAINING SMALL EQUITY BALANCES. The proposals are not supported by any published findings of systemic problems involving accounts with margin loans under $25,000 at true day-trading firms (as understood in the context of proposed NASD Rule 2360), electronic brokerage firms or full service firms.

    The genuine market-wide issue has not been day-trading. Rather, it has been the effect of heightened volatility in segments of the NASDAQ market upon firms' exposure to customer margin loans. On this topic, online firms have responsibly and repeatedly increased house initial and maintenance margin requirements beyond the minimum levels of NASD Rule 2520. Member firms' self-interest has been proved again to be superior to any rulebook solution. In sum, the "safety and soundness of member firms" do not require these changes in the margin rules."

    -Edward J. Nicoll
    Chairman and CEO

    Datek online holdings corp. in a response to the proposed admendments to NASD rule 2520.
     
  81. def said:

    > rfoulk,
    > i don't see how you can claim IB doesn't want you business.
    >
    > First: it states 25% margin after sept 28. In my book that's 4:1.
    >
    > Second: it states that it is regulated by NYSE rules. The other
    > brokers may not be. However, it is waiting for a guidance paper
    > from the NYSE moving on.

    You missed the point, def.

    IB has made a decision to enforce 3-day clearance delay over their previous 0-day. This has nothing to do with the new margin rules and other brokers are still providing 0-day.

    Let's see ... can't trade at all with IB anymore due to choices they've made. Other brokers aren't being this stupid. Hmm ... what to do?

    We don't all have $25K+ to trade with. (Stats that I've read say that the majority of traders don't.) And I'm not interested in risking that much capital at this point anyway.

    IB has been a great service up to this point. Now they seem to have some strange priorities that aren't compatible with mine. Perhaps their latest actions are somehow related to those nutty ideas about trailing stops that they voiced recently.

    Perhaps they're suddenly more interested in `saving the world' than providing their clients with what they need. If I owned stock in IB this would be the indicator to sell immediately. Something has become more important than profit and service to the customer.


    Richard
     
  82. Richard,

    Simply put, I recommend switching to a low-cost direct access broker that does allow daytrading in a cash account (i.e. has real-time buying power). If you are trading small size, you need low commissions. Datek is probably the best option; it is not regulated by NYSE so does not need to be overly cautious about not allowing its customer base to daytrade in a cash account.

    Switch back to IB if it receives non-adverse clarification from the NYSE. In the event of adverse clarification, IB will obviously lose its sub-$25k customer base to firms like Datek.

    Regards/ Candle
     
  83. richard,
    candletrader hits the point. IB is regulated by the NYSE. It simply has No Choice until the NYSE issues guidelines.

    There firm is in no way happy about these rules. It would love to keep your business. However, it would be insane to risk regulatory sanctions that could affect other parts of the business. I can't state this enough to get the point through. Wait till the dust settles. If the NYSE will allow auto-updates of buying power, then I am confident IB will return to the way it used to do business. The rule was posted to you in the mailing earlier today. It seems pretty straight forward to me.

    (BTW, financial statements are published on the web site each quarter. the firm is private but you be the judge. other than stating that the firm makes money I will say that things are going well and I expect them to continue to do well).
     
  84. def said:

    > richard,
    >
    > candletrader hits the point. IB is regulated by the NYSE.
    > It simply has No Choice until the NYSE issues guidelines.

    That's a problem which IB needs to fix.

    >
    > There firm is in no way happy about these rules. It would
    > love to keep your business. However, it would be insane
    > to risk regulatory sanctions that could affect other
    > parts of the business. I can't state this enough to get
    > the point through. Wait till the dust settles. If the
    > NYSE will allow auto-updates of buying power, then I am
    > confident IB will return to the way it used to do business.
    > The rule was posted to you in the mailing earlier today.
    > It seems pretty straight forward to me.

    The first notice IB provided about these problems made it sound like the new rules where a good thing. Why aren't they campaigning against these rules?

    >
    > (BTW, financial statements are published on the web site
    > each quarter. the firm is private but you be the judge.
    > other than stating that the firm makes money I will say
    > that things are going well and I expect them to continue
    > to do well).

    According to various stats, the under $25K traders are quite likely the main profit center in IB's equities section. So next quarter's statement will probably show that things aren't going so well anymore.

    If IB would do the right thing and contest these absurd rules then I'm sure their customers would be more than happy to back them up.

    What are they waiting for?


    Richard
     
  85. richard,
    as a member of the NYSE there is not much you can do except renounce your membership. If you look at program trading stats, IB is typically in the top 5 of program traders (50-150 million shares per week http://www.nyse.com/marketinfo/programtrading.html ) thus I would not expect the membership to be revoked.

    IB did send comment letters and try its best to oppose the rules. I'm not sure where or why you get the impression that the firm is for the new rules. all NYSE members must follow the rules - no exception. The comment letter can be found at:
    http://www.interactivebrokers.com/download/comment7.pdf

    you'll have to check next quarter to see if your suspicions are correct. no need for me to bother commenting on it.
     
  86. this is beaten to death.. bored... :eek:

    If by now, a trader doesn't know what to do, he's really in trouble.
    There are many people able to read in the future here, it's great.. they should trade too :D
    at IB or elsewhere I don't care anymore after 15 pages in this thread alone. With these kind of emotions I suspect trading must be very difficult to you (sorry, I am reading in your business, just like you can read in IB's).

    Def shows a lot of patience after weeks of these. He might be a better trader than I.
     
  87. def said:

    > richard,
    >
    > as a member of the NYSE there is not much you can
    > do except renounce your membership. [...]

    What about continued protests, direct, in the courts and in the
    media?

    What about a letter-writing campaign through their clientele?

    What about an online petition to stuff the new rules back into the
    deranged head they sprang from in the first place?

    > If you look at
    > program trading stats, IB is typically in the top
    > 5 of program traders (50-150 million shares per week
    > http://www.nyse.com/marketinfo/programtrading.html ) thus I
    > would not expect the membership to be revoked.

    So they can afford to rock the boat a bit.

    >
    > IB did send comment letters and try its best to oppose the
    > rules. I'm not sure where or why you get the impression that
    > the firm is for the new rules. all NYSE members must follow
    > the rules - no exception. The comment letter can be found at:
    > http://www.interactivebrokers.com/download/comment7.pdf

    The first notice I received from IB parroted the absurd argument from
    the new rules -- about protecting the trader from himself -- with no
    other explanation or rebuttal. Thus appearing to agree with them.

    And in the IB `Day Trading FAQ' it says:

    . What can IB do about the SEC's approval of the new US
    . stock day trading restrictions?

    . Nothing. IB filed comments in opposition to the proposed
    . rules, but as a broker-dealer regulated by the SEC and a
    . member of both the NYSE and NASD, IB is subject to the new
    . day trading rules.

    IB could be mounting a campaign to reverse these absurd rules. The whole
    world seems to agree they are discriminatory, counter-productive,
    contradictory and illogical.

    So why are they sitting on their butts doing nothing when corporate
    profits, customer livelihoods and basic marketplace freedoms are at stake?

    Perhaps this is why I get the impression IB is for the new rules ...

    Please prove me wrong!

    Why in the world don't all the discount brokers band together and take
    this mess to the courts!? A freshman lawyer with a paper fan could blow
    holes in these new rules without trying.

    >
    > you'll have to check next quarter to see if your suspicions
    > are correct. no need for me to bother commenting on it.

    Good chance I'll be trading with someone else by then.


    Richard
     
  88. I agree with tnt,

    Traders with under 25K need to...

    QUIT YOUR WHINING!!!!!

    It's a done deal. What don't you understand??

    Quit beating this dead horse.

    Stop your griping and go over to Cybertrader or Datek...(or whatever, I dont care)

    Ticket charges are a bit higher but your bigger problem is solved...

    YOU GET TO DAYTRADE STOCKS!

    Noone can predict what will happen in the ensuing months, you'll have to wait and see what 'pans out'.

    In the mean time, your immediate solution is obvious.

    Get it together fellow traders.




    :cool: :cool: :cool: :cool: :cool: :cool: :cool: :cool:
     
  89. ....and posting your emotional tirades in another discussion group perhaps?
     
  90. The surprising thing is traders that don't mind the $25K minimum don't understand that they are at risk too.

    The SEC just broke new ground and broadened their powers with these new rules. This is the first time anyone thought that protecting brokers or traders from themselves was a necessary or reasonable thing for them to do.

    So what's next? Raise the minimum to $50K? Several senators where lobbying for just that!

    You guys are next.


    Richard
     
  91. It is sad that the powers that be, found it necessary to impose the 25k limit. While it does have a negative impact on the small trader the new rule might turn out to be more of a curse than a blessing to those who are able to meet the requirements.

    4:1 margin sounds nice but there is a steep downside to it. Everyone who has been around knows of the psycological implications of trading, how easy it is to be consumed by greed when we have a few good trades, and forget about the risk involved.

    IB has been here for the small guy all along. Many a trader with a small acct has been able to learn, and get a feel for trading doing small shares, while not been bled dry by commissions.

    It would seem that some are forgetting that IB is running a business. They are not going to expose themselves to risk or try to skirt the edges of the law just to please a few traders.

    Those with less that 25k could open futures accts and trade the e-minis or they could take their money and move on. Please ease up on the IB bashing.
     
  92. Furthermore, there have been a number of options included on this board on how to get the 25K minimum you need to trade. Assuming you only have 5k to trade with, take out a 20k personal loan, at lets say 6.5% interest. IB will pay you LIBOR - .5% interest, so you will actually only be paying about 3.5% a year, which comes out to about 700 bucks a year. Thats a lot, but still not unreasonably so.

    If you don't like that option and still want to trade stocks, you could always trade a longer timeframe. A truly successful trader can adapt to almost any market condition. And who knows, maybe you're true trading ability lies in swing trading.

    The fact remains that IB is an excellent brokerage firm that is doing its best to work with these new margin rules.
     
  93. Htrader, true. Just wanted to point out that IB only pays interest on the amount remaining after deducting $10,000.

    Other options (which have been mentioned before):

    options
    futures
    pro firms like Echo
    prop firms
     
  94. I received an email from IB to all account holders yesterday advising yes they are offering 4/1 margin on all $25K+accounts and an advisory on how unfair they thought the new rules are and to vote with your feet and take your business to other venues such as futures, options and offshore. Also I have been in touch with the NFA in Chicago and single stock futures should get a December launch. 100 share contracts, appx. 20% margin and folks the volume will be enormous in these instruments, particularly in the big cap stuff. The securities markets shylocks have maybe really shot themselves in the foot this time. Within a matter of months they may be adjusting their closes to the futures settlements, you have no conception how big the volume in Cisco, AOL etc. could be, and I'm talkings 100's of thousands of contracts a day! Keep your powder dry!:cool:
     
  95. Some people have suggested that a way round the $25,000 limit will be to trade single stock futures when they are introduced.

    Don't know how reliable the information is, but a futures broker has recently reported in misc.invest.futures that the $25k limit will apply to them too.
     
  96. Hello Everyone!

    I am a new trader just starting out, presumably with IB and have a few Q's if anyone would help.

    My intended style would be swing trading for now (1-5 days) off of dailys at www.stockcharts.com. I have like 20ish listed stocks I follow.

    -if I start with 4K will I be able to short and HOW MUCH? ( I suppose 2000K worth of stock...)

    -why the h*** did they introduce 3 day clearance? That means I can only trade say once a week or less...

    -do accts. over 25k clear realtime?

    - DO I STAND A CHANCE??? :) :) :)

    Thank you all so much and trade well!

    Alex
     
  97. Hello neo hr,

    Under new SEC margin guidelines, margin accounts under $25K will be subject to more stringent requirements that in the past. There are numerous threads here on ET discussing the new SEC rule and numerous suggestions/recommendations to those who do not meet the new minimum.

    You are correct that real time clearing is only available to margin accounts exceeding 25K in equity, at least at IB. I have heard there are other EDAT brokers that will update purchasing power in real time for CASH accounts, but you'll have to look into this for yourself as i do not know any of the details. The downside, obviously, is you need a margin account to short stocks.

    Good luck
     
  98. neo hr,

    In my humble opinion, it's pretty hard to do with 4K, even without the new SEC rule. Don't forget that the swingtrader's nightmare is always that unexpected overnight gap-up or gap-down, which can be an analyst's upgrade or downgrade, unanticipated acquisition or merger news, and what not. (Believe me, I had enough of these gap-ups and gap-downs myself when swingtrading stocks.) With 4K, you can very easily suffer a sizable drawdown due to one of these gap-ups or gap-downs. This is especially true when you are shorting. For example, if you are short 100 shares of a $30 stock--$3000 has already been held up in your account, and all of a sudden, the stock gaps up $4 on acquisition news overnight. You lose $400. That's a 10% drawdown. It's pretty hard to make up for that. Moreover, you must be prepared for the worst, what if the stock gaps up more than $10, like HF (Heller Financial) at the end of July. If you were short that stock, you would lose more than $1500 just overnight if you just had 100 shares short. That's more than 30% of your account! If you had 200 shares short, you would lose more than $3000. Pretty scary, isn't it?

    I also started out swingtrading stocks with a small account. Right now, I still have a small account, but I am doing options almost exclusively. Options are a lot less risky, especially when you are short. However, since you are new to trading, I do NOT suggest that you trade options. What you might want to do is to paper trade stocks for some time, and then start with options. If you don't like paper trading, you can try with your 4K but you MUST be prepared for substantial drawdown, and you consider this 4K as money you can lose--not your rent or mortgage money. Not only that, if you are unlucky enough, you might even get a margin call for your short stock position because your account is not enough to pay for that huge gap up. That's a lot of risk you are taking on.


    stockoptionist
     
  99. Hi, neo hr,

    Stockoptionist again. Since you are new to trading, the most important thing right now is education. Read as much as you can about trading. Keep up with what's going on in the economy and see how it affects the markets. That's the key. Don't jump into it too quickly, especially if you have a small account. I don't want to sound like grandpa, but I don't want to see you lose your capital unnecessarily either. In fact, I wish I had a mentor when I started out, but I didn't. That's why I had a lot of costly mistakes.

    stckoptionist
     
  100. Hello Stock optionist!

    I WANT you to sound like my grandpa :) ! As some of you may know, Im from Croatia....a country where 4k=yearly sallary!!! But, ive been learning to daytrade for like three years now but the new SEC rule kinda screwed me up! So I decided to go swing with nyse exclusively, perhaps only long for now. Although it would be better to short in this market as it seems to me all the rallys are merely short pullbacks in a dn trend.

    So, anyone wanting to be my mentor would be MORE THAN APPRECIATED!

    If you like, e mail me at neo_hr@yahoo.com.

    Cheers to you all and KEEP THOSE TRADES GREEN!

    Alex_The_"Specialist":cool:
     
  101. Hi, neo hr,

    Since you have daytraded for 3 years and have background and experience with the markets and technical analysis, I believe you can just swing trade using options. Right now, there is NO way I want to short a stock without hedge after trading options. I basically trade the short side using puts. That limits my risks to at most to a few hundred dollars per contract. With 4k, which is equivalent to a year's salary in Croatia, you HAVE to limit your risk. And the best way to do that is, in my opinion, to do it through options. Read a few books on that subject, start paper trading and then you can do it with real money.
    I hope this helps.

    Best wishes,
    Stockoptionist
     
  102. Actually, I have been LEARNING to daytrade for three years now. Only done some papertrades. i am going live next week or so.

    Cheers!

    Alex
     
  103. neo hr,
    It is possible to daytrade using QQQ options or options of household names like Cisco. Usually they are very liquid. The spread between bid and ask is not wide, often only 10 to 15 cents. Since no such daytrading rule applies to options, you might want to see if that works for you. I don't know about S&P options. I've never traded them.

    stockoptionist
     
  104. neo hr,

    Well, then I have to take things back a bit. Doing it with real money is a far cry from doing it on paper. When real money is on the line, you are very easily overcome by greed and fear. In that case, I don't suggest that you jump into options right away.

    optionist
     
  105. ib told me, that also after sep. 28th stockmargin accounts with less than $25k will still update buying power realtime.