Originally Posted by jumpman6235
Isnt the whole purpose of a margin account is to use THEIR money so you dont need to wait for the funds to settle?
when i buy X, Y, Z then in the same day sell A, B, C then again in the same day buy E, F, G ... am i not using their money? how is this different then buying and selling the same stock?
Why 25k? .. why not 5,10,50,100?
Okay...you sort of answered your own question.
Let me ask you this, would you allow just anyone to borrow money from you and give them an unlimited ability to trade as they wish, with YOUR money? They gotta protect their own interest. Using their money is a privilege, not a right. It's their money and they get to make the rules. If you do not like the rules, USE YOUR OWN MONEY!
The reason you have to wait three days to settle after you've bought and sold a stock is that the trade has to be verified and that it not be disputed in some manner. There are such a thing as "fail to deliver", meaning that the trade was executed, but there were not really shares to be had to buy and sell. These are just safeguards for both the trader and the broker.
And as for the $25k, there has to be a line drawn. It might be an arbitrary number, but lots of things are that way. They set it up and I think you'll be hard pressed to try to have it changed. $25k may represent the threshold of capital that institutions consider to be a stable amount. Like, hey, if you've got $25k you're more apt to protect that amount than if we were to allow say only $10k, which in the scheme of things people are more able to recover from a total loss than $25k.
Anyways, rather than complain about it, which will get you nowhere, how about just following the rules?