http://etfdailynews.com/blog/2010/0...l-etfs-faz-fas/ For example, pattern day traders in margin accounts using ProShares funds that multiply returns by a factor of 2 would have a $50,000 minimum daily maintenance requirement. Such traders favoring Direxion triple-exposure funds would have a $75,000 minimum daily maintenance requirement.ââ¬Â
D'oh. I've been witing for about 3 years for the PDT rule to be removed, not have the minimum A/C balance increased!! lol
it is not misleading as the small trader does occasionally trade leveraged etfs on margin. it is a useful piece of info for him and hopefully u will find it useful also.
Geez guy, yes it's misleading. Thread title should have been specific. Especially since the majority of Leveraged ETFs are traded in cash accounts and not margin. The way you titled it made it seem like it applies to pattern day trading margin rule for stocks. In any event, for leveraged ETFs, you simply multiply the leverage ETF's return factor by $25,000 to find your PDT minimum margin. This rule was seen as coming since it was supposed to be implemented in December of last year.
'does occasionally' should tell you that you should have worded the thread title differently. Although, I'd wager to guess you did it this way on purpose.
ETF are low risk for daytraders and investors and you don't see 50% gap downs overnight...and more difficult for market makers to manipulate and trade against retail daytraders. $50,000 just to daytrade? there was a time when there was no PDT and anyone can daytrade with no minimum $$$ to daytrade. i guess they need more cash deposits and short on cash. 80% cash deposited don't leave ...and the brokers use the excess cash too to trade their own account,,they aren't supposed to but i don't see how anyone can enforce the rule of broker not able to use clients exccess cash to trade their own account. it comes down to this ,,there are fewer traders/daytraders or market participants..and to maintain the cash level at the market,,they just increase the minimum cash required. there is like half the number of market participants in terms cash and numbers or volume than before.. when traders see less volume less orders. cash is the lifeline of the market without cash there is no transaction. you can't trade or open an account without cash..i think this increase in min. to get more liquidity or cash into the market..many people don't have $75,000 cash laying around and if they do get it's usually borrowed money...giving the sad statistics of traders or daytraders in retail...if they blow up their account they would be in debt and owe money.. don't lose money you cannot afford to lose..being debt is bad for the mind. or don't lose money you don't have . its a sad statistics but 80% of accounts lose money for whatever reason..even pros blow up.
"Especially since the majority of Leveraged ETFs are traded in cash accounts and not margin. " any proof?