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Day Trading Margin Question.

post #1 of 5
Thread Starter 
Ok, the way I trade now is with a fixed amount of money with no margin setup. So after I make a sale, I have to wait about 3 days for these funds to settle before I can buy stocks again, without getting caught up in a free ride mess.
Now what restrictions does a day trader have when he or she has 25 thousand dollars and a margin account setup? How often can he trade? If this person has 30 thousand dollars (60 thousand buying power, I think with margin?) and is a scalper how many times can he trade in and out of a stock? Is this person restricted to the same settled funds issue if he traded the full 60 thousand dollars the margin account will allow? Say a stock is 10 dollars, and in order to really make any money scalping he needs to purchase 3000 shares, thats 30,000 dollars, half his buying capacity. He then quickly sells for a small profit but wants to continue trading the same stock all day long. Is he limited to two trades of 3000 shares which would be 60,000 dollars?
post #2 of 5
This is how it is at TDAmeritrade. If you have 30k you get 60k worth of buying power (2:1) this is your 30k plus 30k you can borrow to hold overnight positions. Once you execute 5 day trades within a 5 day period and are flagged as a pattern day trader you get 120k worth of day trade buying power (4:1) your 30k plus 90k you can borrow to day trade with.

There is no limit to your day trading as long as your total current positions don't exceed 120k. So you can buy 100k worth of FAZ sell it and then buy 100k worth of FAS sell it rinse and repeat as many times as you want. The only limitaion is you can't hold a position larger that 60k overnight.
post #3 of 5
Quote:
Originally Posted by Crazed98 View Post
This is how it is at TDAmeritrade. If you have 30k you get 60k worth of buying power (2:1) this is your 30k plus 30k you can borrow to hold overnight positions. Once you execute 5 day trades within a 5 day period and are flagged as a pattern day trader you get 120k worth of day trade buying power (4:1) your 30k plus 90k you can borrow to day trade with.

There is no limit to your day trading as long as your total current positions don't exceed 120k. So you can buy 100k worth of FAZ sell it and then buy 100k worth of FAS sell it rinse and repeat as many times as you want. The only limitaion is you can't hold a position larger that 60k overnight.
Wow that would be disaster if you get caught holding that type of change overnight on the wrong side of a gap up/down... I would not have the balls to make a play like that
post #4 of 5
as long as you have the 25k in you account at the beginning of the day you can trade as many times in a day as you want without being flagged a PDT. With the margin account you will not have to wait for settled funds.
post #5 of 5
Thread Starter 
Quote:
Originally Posted by stang3O2 View Post
as long as you have the 25k in you account at the beginning of the day you can trade as many times in a day as you want without being flagged a PDT. With the margin account you will not have to wait for settled funds.
OK. Thanks. I think I knew this at one time, just needed to revisit the requirements.
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