posted
Hard enough to follow rules previously, it is even tougher now.
Today E*trade made policy changes which are said to be online broker wide; all brokers are doing this. One problem which has come about is E*trade is still not sure how this policy should be enforced; confusion on the SEC rule.
Previously, funds from a stock sell would be "unsettled" and unavailable for use for a period of three days.
Currently, funds from stock sells are now made available instantly.
However, if you buy a stock with those funds from sells, should you sell this new stock within three days your account is flagged with a securities violation. Two violations results in your account being shutdown for ninety days.
You can use funds which have resided in your account for over three days without risk of violation.
You cannot uses sells funds in your account which are less then three days "old" without risk of violation.
In short, if you buy stock with new funds and sell that stock within three days, you are in violation and your account will be frozen for ninety days.
Keep close track of your funds. Call your broker and ask about this. Be sure you understand their rules. You could lose your account for ninety days if you make an innocent mistake.
posted
Margin accounts allow your stock shares to be used for shorting.
Yes, this applies to cash accounts such as I maintain. No cash, no buy. I don't use "credit" for investment.
Incidently, this SEC rule and broker policy changes do not apply to brokers, specialists nor Market Makers. The SEC continues to make rules which hampers abilities of private investors to profit, and enhance the ability of Wall Street to profit off us.
posted
PG that is not a new rule--it is the FREE RIDE rule and has been in place at least since i opened my first on-line account last summer---my human brokerage had/has no clue about it.
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posted
just another tactic to get you to use margin--- you margin guys need to look at your dividend situation as it pertains to taxes--- if you have margin and the broker loans out your shares to someone during dividend time(so they can short YOUR stock) the dividend is taxable at 30-35% instead of the new 15% rate--just another way to have fun with your money--LOL
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posted
PG I just open an acct with Scottrade the end of February and they are operating exactly as you stated. I am not sure how they operated before end of February...
posted
Yes, a mention of the Free Ride, but this is coming down because of the new SEC rule on seventy-two hour delay of funds. Don't remember the exact date this went into effect, think in December.
This is more than Free Ride prevention, this is enforcement of the new SEC rule to prevent day trading by investors. Account freezing is based on securities violations, not on company policy.
E*trade customer service explained they are still not clear on how this SEC rule is to be viewed and how to enforce it.
Ultimate goal of the SEC is stop all day trading by private investors. Their definition of day trading extends well beyond intra-day trading. I believe the SEC rule for pattern day trading is a number of trades within a five day period.
Two bottom lines.
Your account can be frozen if you do not carefully track the date stamp on your generated funds.
The SEC continues to cause harm to private investors and continues to provide methods for Wall Street to steal our money.
quote:Originally posted by Leu13: PG I just open an acct with Scottrade the end of February and they are operating exactly as you stated. I am not sure how they operated before end of February...
Leu13
Scottrade was operating that way in June when I opened my account--they are kind enough to allow me to use my funds with a caution---some houses just don't let you have them till they settle--
posted
No doubt, Glassman, a move to encourage investors to use margin accounts which increases profits for brokers, and adds shares to be used for shorting.
Both of those notions cost investors.
Both of those notions benefit Wall Street.
Telling you, the SEC and Wall Street should be prosecuted under RICO.
posted
Here is an interesting situation for you, a pretend situation.
I have 10,000 cash sitting in my account for ten days. Today, I sell stocks and add another 5,000 to my cash. Tomorrow I buy 15,000 worth of a stock. Two days later I sell that stock.
posted
I must be out of the loop, but when i sell a stock, E-trade wont let me even use that money for 3 days, it shows it in my account but it doesnt show up under buying power for 3 days. Maybe I just dont understand what yall are talking about?
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posted
It gets even better PG--I opened this account as an experiment to learn if i have what it takes to be a daytrader--i opened it with a very small deposit-partly due my skepticism of on-line security and partly due to my unwillingness to throw my retirement into trading as opposed to investing--I have had to manage the three day rule and the 4 daytrade/in5 rule to develop a 4-600% gain in 8-9 months. starting with less than 5K$ made it even harder. If i have some shares of a stock already and i use some unsettled funds to ADD to my position--can I sell some of the stock BEFORE the new adds settle--or do i have to wait for the settlement to sell any?--my broker can't even answer that---some people have advised me to open three or even four trading accounts to cycle the cash through--that would currently require that i switch away from my long-term account entirely--i refuse--the good news is that i have been able to accomplish quite a bit with all of these restrictions and once the markets straighten back out i have to find the answer to my last question--
WILL I EVEN BE ALLOWED TO be a pattern day trader without margin?---if not-which is what i suspect- i will have to open a margin account and ONLY use it for daytrading--nothing else----
posted
Ok, thanks to feedback from participants here, I called E*trade again and talked to a different service representative.
Yes, the pretend situation above is a violation.
However, should I only sell 10,000 of the 15,000 in stocks, no violation.
I asked if this is related to SEC 4031 rule, she said "no" but is related being part of an effort to eliminate day trading and this only applies to cash accounts.
Part of this is the "Free Ride" company policy, part of this is inspired by the SEC 4031 rule.
Summary is you have to be careful on fund time stamps and the 4031 rule. You can, in effect, violate company policy and securities laws, without any intent; two for the price of one.
Interesting all of this is only aimed at cash accounts, only aimed at the real money in the markets.
Annoying none of this applies to any of the boys on Wall Street.
Any comments to help me better understand all of this will be appreciated. These new rules, these new changes, only add to my challenges and confusion.
quote:Originally posted by BananaBelly: I must be out of the loop, but when i sell a stock, E-trade wont let me even use that money for 3 days, it shows it in my account but it doesnt show up under buying power for 3 days. Maybe I just dont understand what yall are talking about?
Banana--that is probably because you unknowingly violated the Free Ride rule early on-- so they set your account up that way to protect you--if you open a new account somewhere else you will probly get the cash to use until you violate the rule?
posted
Sorry, I am still new to this, so I don't really understand how this can apply for day traders. How can they say that you cannot reinvest your money for three days after you sell it? Don't day traders constantly buy and sell in the same day?
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posted
E*trade change just went into effect today.
First customer service rep was confused as I am.
Second customer service rep was confident but uncertain about the 4031 rule.
GAK!
So simple years and years back.
Wasn't retired then. My habit was to spend what little free time I had, sitting in my stock broker's office watching the big ticker, usually during lunch.
Comical, I did this so much, employees would glance at a clock, "Yep, she is right on time," or they would roll their eyes.
When I would see a buy or sell price I liked, I would jump up out of my customer waiting chair, run over to my brokers desk,
"Sell this stock, now!"
"Ms. Know-it-all, my advice is you should..."
"Shut up and sell the damn stock, NOW!"
Broker office entertainment, yep, that is what I once was, pure comical entertainment.
Now I am a forgetful confused old woman. Don't have to cope with those know-it-all damn brokers, however.
posted
PURL GURL---i didn't picture you as my granny's age somehow--LOL---i was the grandkid that had to be quiet while grandad made notations off the ticker board--LOL
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However, I am still quite childish in many aspects. Still have this view when you see someone over thirty,
"Whoa, that is an old woman!"
Eventually, it dawns on me I am over thirty and now an old woman. Shucks.
Let me put it this way, I was too young to run off to Woodstock during the Summer of Love, but old enough to appreciate Buddy Holly.
Read the lyrics of "Lather" by rocking Jefferson Airplane and you will understand.
New T, research the SEC rule 4031 for a definition of pattern day traders. If you can make sense of it, let us know.
You only need to be concerned with using funds which are less than 72 hours old to buy a stock, and if you sell that stock within 72 hours. Use your new funds to buy, but don't sell for three days, sell on the fourth day.
Of course, if you are one of the big boys over on Wall Street, heck, you don't even need to pay for the stock; you can do whatever you like!
posted
The rules applying to pattern day traders were supposedly implemented to protect the new wave of on-line internet traders from themselves--many disgruntled newbies filed civil actions after losing their life savings in the late nineties.
[This message has been edited by glassman (edited March 19, 2004).]
posted
I think we should show those to the rest of the world and pump them as luxurious amrican living--maybe that would stem the flow of illegals coming to get rich--LOL
posted
Forgot to mention, if you are using E*trade "pro" level live feed, you will not receive a warning you are about to F'up under this Free Ride idiocy.
Using their internet interface, you will receive a warning before you commit to a real F'up.
The more professional you are, the more aggressive of an investor you are, the more money you earn for brokers, the more you are penalized.
posted
Not sure if this will help or confuse but an email sent out by my broker(trackdata)back in October 03.
Dear Trader,
Since many traders of BB and Pink Sheets inadvertently generate money due calls, we at TDSC are sending you this e-mail to clarify the industry's rules on the subject.
NOT MARGIN ELIGIBLE Bulletin Board and Pink Sheet securities are not margin-eligible, which means they cannot be day traded. This is true even if you hold these securities in a Margin Account.
THE BASIC RULES You are allowed to sell a BB or Pink Sheet stock the same day that you purchased it. However, you are not allowed to re-use the proceeds from the sale of a BB or Pink Sheet stock that was bought the same day. What this effectively means is that all of your BB and Pink Sheets purchases for the day cannot exceed ½ the marginable market value of your account at the beginning of the day + cash + adjustments for sales of securities you held overnight.
BB BUYING POWER-A NEW DISPLAY ON ACCOUNT SUMMARY Where many traders get confused is that they have a margin account and see they have plenty of Buying Power left, unaware that the Buying Power may not apply to BBs and Pink Sheets. TDSC is trying to help with this problem. If you are a BB or Pink Sheets trader and your Buying Power for BBs and Pink Sheets is different from your regular Buying, you will see a new display in your Account Summary Page-BB Buying Power. This number reflects the amount of purchasing power you have for Bulletin Board and Pink Sheet Stocks, but you'll only see it if you hold positions in or place a trade for BBs and Pink Sheets. (You will not see the BB Buying Power display if you have a Cash Account or a Margin Account limited to aggregate trading.)
AN EXAMPLE Let's say your account contains the following at the beginning of the day: - $200,000 marginable securities - $70,000 BB stocks - $50,000 cash
Your BB Buying Power is $150,000 (½ the marginable market value of your account at the beginning of the day + cash).
Let's say you sell $25,000 of the BB securities in your account
Your BB Buying Power is now $175,000 (½ the marginable market value of your account at the beginning of the day + cash + proceeds of sales of securities you held overnight)
Let's say you buy $20,000 of a BB stock called WXYZ. Then you sell all $20,000. Then you buy WXYZ back again.
You can buy and sell the $20,000 of WXYZ the same day up to 8 times. At that point, you will have spent a total of $160,000 on WXYZ. If you repurchase $20,000 worth of the security again (or any other non-marginable security), you will have exceeded your $175,000 BB Buying Power for the day.
posted
Glassman, there some efforts directed at replacing Market Makers entirely, which supports my long contention Market Makers are not needed.
Electronic "direct buy" networks are becoming very popular. Inherently there is a lot of resistance because this knocks Wall Street out of the loop; they lose control.
Wall Street is fighting this tooth and nail by generating FUD. They are stalling this by creating all kinds of excuses why they cannot do this, claiming market devastation and all that.
Moving the NYSE to all electronic, a possible merger of NYSE with NASDAQ, those point to eventual direct buy electronic networks.
Lot of articles available on this through internet search engines.
When this happens, we will be the Market Makers and newbies will be at our mercy.
posted
PG--i presume some of the activity blamed on MM's really is daytraders anyway---i suspect that much of the downtick-shorting we observe is actually a daytrader or team of daytraders feeding tiny lots they have pre-purchased in anticipation of the right conditions to force a stock down--the amount of capital risked is negligable if the strategy is played carefully and there is no PR released during the play--if there is some profit to take as the small lots are fed on the downtick--the commissions become the only real expense--i assume that some traders get better commision rates than others
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posted
Yep bit like that...They made it easy by including a BB Buying Power figure in the trading program so you can't exceed it,maybe E-trade could do similiar
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posted
speed of light is 186Kmile/sec-- the dinosaur came before the chicken-as proven by the inhibition of beak development promoters to demonstrate that chickens do in fact have the DNA data necessary to grow teeth gravity is a simple inverse function derived from distance and force--see daytrading is simple-LOL
by the way the recent OTCBB surge--that's US-highest since 2000-- means that the market is about to crash--LOL-
quote:Originally posted by Bob Frey: Glass, traders ( Big Ones ) pay no commisions.
Friend of mine made around 700 mil. on web van. Bought at .10 before the IPO and then sold in the 20.00 range.
He trades for free as well as has a very nice office supplied for free as well.
[This message has been edited by Bob Frey (edited March 19, 2004).]
i suppose that he is able to shop for those perks at different brokerages--an account like that would make any house happy to accomodate him/her.--one question tho--how did he get in prior to the IPO?
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