I have restrained myself from getting into this fray. But, when assumptions are made about the trading abilities of those with under x amount of money in their account -- well, that hurts! This rule is going into effect -- nuff said! The brokers are still figuring out how they are going to enforce it -- most have not finalized it yet. I do not think there is some cabalistic council, meeting secretly behind closed doors colluding to eliminate daytraders. In my opinion this is most likely the result of a complex system of independent parts interacting in their own best interest that has produced a result -- in this case a rule -- which benefits some and not others. It really is about, how does it effect you and what are you going to do about it. And as for those of you who think you are "picking my pockets" or that i am "regularly contributing to your profits" just because i am a "undercapitalized newbie" ........ well, you fill in the blank! My equity curve has a positive slope, and all of my trading plans have positive expectancy. Gee how did that happen? regards/greg
gh1 You maybe confusing "elitism" with reality check. While I believe anyone should be able to trade in a professional manner in any market. There is the issue of "risk managment" from clearing brokers. Also the second most important strength of a trader is his/her staying power i.e. disposable funds to risk. When betting on a trader I would lay 15:1 on a guy with a million than a guy with 100k in daytrading given everything being equal. I have nothing against traders with 5k. If they have the will and courage fine. But when a broker is taking your account in the Futures market he will scrutinize you to pieces. Mostly will ask about track record and financial strength...is this elitist ? Why should this be different for Daytrading ? Nasdaq acted quite like a "Chicago pit" the last 18 months. Now it's quiet but there are lots of bodies laying around..
Well, as with nasdaq they asking for 50k anyway (Bright and Echo) I did not do heavy calcs. but I stand by my notion that it won't be 100k next or even any upwards change. I also think it's a crazy and bad law and it should be challenged I just think it's not a conspiracy against traders but protection to brokers against uncollectable debts.
I was wondering why brokerages would want the new margin requirements. Doesn't it eliminate a large portion of their business. The only reason that I can think of why a brokerage would want the higher balance is to allow them to increase revenue from the normal 12b1 fees on the balance to offset the fact that they lose the margin interest to daytraders because they don't hold their positions overnight.
What brokers could do to protect themselves from margin defaults is what IB does, which is to automatically liquidate a client's position if it exceeds their margin maintenance requirement, thereby never actually triggering a margin call.