Another approach to frequent trading (but not daytrading) an IRA - Profunds or Rydex mutual fund families. You have one move per day, end of day at NAV, but unlike most mutual fund families they don't restrict frequency of trades - you can trade every day if you want. Also, they have negatively correlated funds to you can in effect go short the market in an IRA. At least for Profunds, they have negatively correlated funds for the S&P, Naz 100, and Russell 2000. Finally, they have funds which are 2x correlated with the market, both short and long, effectively giving you some leverage. It's not daytrading, but for IRA money with a long-term target it allows you to do some fantastic things compared with what was available just a few years ago. A satisfied Profunds customer.
I don't doubt that the 3-day clearing rule is indeed the "LAW"; and also that one can never use margin in an IRA. However, in my opinion, enforcement of the 3-day clearing rule is discretely up to the individual broker's own enforcement policies. I have been trading my IRA up to its max everyday and am never bothered; however on a few occasions I have traded more than even my daily cash balance, and subsequently received a call. Depending on the amount of the overage a simple I'm sorry sufficed, on other occasions I needed to call in my trades(couldn't use the computer) for a day or two until I begged. Possibly, but I doubt it, the gov't might be attempting to force all brokers to observe the 3-day rule in order to level the playing field as they say.
Have you compared Profunds to Rydex when you made your choice? Just curious what your discoveries were, I am still deciding on which one for transferring my IRA to. Michael B.
I compared a year or so ago when I made the choice, so you should do your own comparison now, things may have changed. At the time I believe Profunds had a wider selection of funds, tht was the major factor in my decision. Not sure if that's still true. I recall reading a comment by a money manager that he preferred Rydex over Profunds because they have been able to more closely correlate their index funds to the index moves. I recently checked the three funds I use - over the last 1-3 years (depending on the fund), the 1x correlated fund was about 97-98% correlated, the 2x fund was about 91% correlated, and the 1x negatively correlated fund was about 95% correlated with the inverse of the index (ie, corr. coeff = -0.95). That's close enough for me, I'm just tickled to have leverage and shorting ability in an IRA, I'm more concerned that the correlation is consistent than having it perfect. Gary
amg, I think the confusion is that the E*Trade rep told you that these are "NEW" rules coming in October. In reality, these are OLD rules that the SEC has been enforcing for over a year and E*Trade is just now getting around to implementing. Ameritrade was the first one forced to do that. Others were forced to do that shortly after that. E*Trade just seems to be one of the last to implement this on their systems.