Margin Account trading

Discussion in 'Trading' started by tinytrader, Dec 20, 2008.

  1. I have been trading equities in a cash account.

    I have some questions about a margin account. I am educated on the differences between standard and pattern day-trading accounts.

    With a margin account, do you avoid the T+3 stock clearing time period after selling? Always waiting for the cash to clear I really miss some opportunities and wish to find a way to avoid the wait.

    If this T+3 cannot be avoided, how do people day-trade everyday? That would take a large amount of cash in a margin account.

    Thank you for educating me. I search for this answer on the internet and did not find a clear statement.
  2. rwk


    In a regular margin account, you have immediate access to your funds for trading as soon as you liquidate something. You still have T+3 for withdrawals. The PDT rule has nothing to do with margin/cash. You also need a margin account for selling short.

    Some brokers (e.g. IBKR) offer a restricted margin account for tax-advantaged customers (i.e. IRA's). It gets around the T+3 rules but does not allow the use of leverage.

    All customers are subject to PDT rules. The only way around that is to become a proprietary trader.
  3. Just for your info as well, options are T+1, and futures have nothing at all and no day trading rules!
  4. ssbc19


    PDT only applies to margin accounts, not cash.
  5. All good replies. Therefore, no T+3 waiting for margin accounts while trading, excluding a withdraw.

    That explains how to day-trade each and every day without the cash account problem of free-riding.

    I understand the margin account is needed for shorting.

    And I like the Futures way of doing things, no PDT to worry about, muc simpler!

    Thank you for your time.