I wonder if any direct-access broker will let me open a margin account with less than $5000. I'm with Datek now, but it's not a real option for daytrading. The one good feature about Datek is that they let me use 4x my balance for daytrading buying power even though I have less than $25k with them. (Of course, I limit my trades to 3 round-trips per week because of the pattern daytrading rule.) I would like a broker who will let me trade more than 2x my balance for daytrading purpose. Of course, it must be a good broker with good execution, otherwise I wouldn't bother at all. Please help. This is a serious issue for me.
AFAIK, it's not legal for them to do this. Can someone confirm that, while other brokers are being hounded by the regulators over the silliest and grayest interpretations of the grayest rules, Datek is allowed to commit such a flagrant violation? IB will open margin accounts for $2K. You are restricted to 50% initial margin (2x BP) and the 3/5 trade rule, per the regulations. Cheap (especially for small accounts) $1 minimum commissions and good executions. FWIW, I remember looking at someone's trading system once. It generated 4 round-trips per day. At IB, you could profitably trade the system with a $1500 account ($2K practically, for legal reasons). At Waterhouse, with $15 commissions, you needed a $12K account. Depending on your style, commissions make a _huge_ difference.
I know of a direct access broker that gives you 4x buying power with less than $25k. However, they only let you have it if you are not a pattern day trader. If you become a pattern day trader (violate the 3 in 5 days rule) they take away the 4x. No broker can give you 4x if you are a pattern day trader that is an NASD rule. Some brokers interpret the rule differently before you become a pattern day trader. That is why some will give you 4x if you are not pattern. If you're intersted to know the broker then private message me as I don't like to post URLs in public messages.