posted
Just some questions so I don't get myself in trouble.
I have $4,500 to start off with, obviously less than the $25,000 SEC req for pattern day traders. I realize this limits me to 3 trades per week. I am using ETRADE and have a margin account.
Do I need to worry about not having sufficient funds to trade with each day due to unsettled activity if I trade Monday, Tuesday, Wednesday, for example (3 total day trades, investing the maximum each day (no margin $$ used), and holding none overnight)? Or am I okay since I have a margin account?
Thanks in advance, rizz
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posted
a third, a third, and third....start afresh each Monday; open two accounts . . . if you're just starting, suggest you don't use margin till you've got your "sea legs."
Also, suspect you're confusing "settle" time and "pattern day-trader" regs, which address the number of "round-trips" you can make...
Three different things: these two are related, "settled funds" and "free rides," which margin account avoids; "round trips," which is in n out on same stock...
[ January 14, 2006, 10:21: Message edited by: BuyTex ]
-------------------- Nashoba Holba Chepulechi Adventures in microcapitalism...
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posted
I don't play much, but everytime I do something I keep getting this disclaimer warning over etrade about possibly being considered a daytrader. So, please forgive me as I dumb down to the point of supidity.
Let's say I'm working with a total of $1,000. It's all in one company and everything is settled.
Am I allowed to sell that stock in the morning.. buy into another company immediately and sell that in the afternoon? Wait.. for what? 3 days and do it again?
Thought I had it figured out, but that disclaimer is intimidating.
Sorry for this novice question. Maybe the disclaimer is SOP.
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this is from TD Waterhouse, about as simply worded as it gets, preferable I think to quoting SEC/NASDAQ. Technically, the regs mention trading in margin accounts... Anyway, if this helps:
quote:What is day trading?
Simply stated, day trading is purchasing a security and selling it on the same day (or selling a security short and purchasing it back on the same day) in a margin account. This does not apply to the sale of a position held from the previous day or the purchase to cover a short position that has been held overnight.
What is a pattern day trader?
A pattern day trader is defined as any customer who executes four or more day trades in an account within a rolling five-business-day period (provided the number of day trades is more than 6% of the total number of trades in the account during that same period).
It's "round-trips" that are at issue, specifically 4 of them within 5 consecutive days...if $1k represents your entire account, that would be greater than 6 %...but as you describe it, you would have only one round-trip--the second stock, the one you bought in the morning and sold in the afternoon.
However, without a margin account account in the first place, you might not be allowed to sell the second stock.
At the least, you would probably get an auto-generated notice that you are breaking'invoking the "free ride" provisions. In other words, you would be OK buying the second stock with unsettled funds--ie, had not yet settled from the sale of the first stock--but by selling the second stock, you are taking a "free ride."
If the system allowed the sale, you would most likely get an e-mail or a phone call from your broker, requesting a deposit to your account to cover the "free ride."
make sense?
-------------------- Nashoba Holba Chepulechi Adventures in microcapitalism...
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posted
There's a reason my name is name is VeryGreen...I am very very green to all of this...I've been reading the posts on this thread and now have my curiosity peaked. I'm not wanting to get knee deep in this stuff just yet, but have been doing my DD on several different companies for some time now. If I go in with $1000 and my company moves where I want it to a few hours after I buy and I decide to sell I'm going to be a "day trader" if I want to buy into another company on that same day??
posted
I guess another question to this...is there anyway around this? Or do I have to become a daytrader...and if so...what does that look like monetarily and do you day trade through an online borker?
posted
I'm the last person who should respond to this, but.. and folks please correct me if I'm wrong.. you buy.. then sell for a profit. However, not being a day trader.. your money has not yet settled. It's like going to the bank and despositing money. In some cases it'll take a couple of days to clear. That's the same with you and your broker. You sell for a profit.. but the so-called check has not yet cleared. It normally takes about three "trading" days.. for it to do so.
As for how to become a day trader.. which means you can buy and sell all you want.. you must have 25K in your account.
posted
On the other hand.. look at the BuyTex post a few posts back. Maybe you can. For us newcomers this can all be very complicated.. but it's something everyone new goes through and after awhile they get the hang of it.
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