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I was going to buy a few suggestions in this forum and sold some stock to raise the money for the purchases. But I'm told by my broker that I'll not have access to the funds for 3 days due to a change to SEC Rule 2520. I've been unable to find out anything from the SEC site about this rule (like the text of the rule). It looks like it might apply to day trading (which I don't do) and margin accounts (mine's an IRA). Does anyone have the same problem or know of this rule?
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posted
WAYS TO DEAL WITH IT. DIVIDE PLAYING FUNDS INTO THIRDS SO CONSTANTLY ROLLING MONIES. OPEN TWO INDIVIDUAL ACCOUNTS RATHER THAN JOINT ACCOUNTS WITH SPOUSE. MAKE EACH OTHER "IN CASE OF" ON BOTH. GIVES YOU MORE PLAYING ROOM ANYWAY. PLAY LARGER FOR MARGIN ACCTS.
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Yep, it's E*TRADE. I think they are applying the rule in error and I'd like more information on it. If they are applying it correctly I pland to write the SEC and my congressmen to complain. It's stupid for small investors like me.
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at ameritrade they told me the stock sale has to actually settle for the funds to be available to trade on again. They told me i could get around this my having over $2000 in my account which then makes my account marginable.
Makes sense to me. Doesn't change the fact i don't have 2k.
quote:Originally posted by GuyInBoxers: at ameritrade they told me the stock sale has to actually settle for the funds to be available to trade on again. They told me i could get around this my having over $2000 in my account which then makes my account marginable.
Makes sense to me. Doesn't change the fact i don't have 2k.
Do not believe AMer on the $2000.00. I have way more than that in my account. How they do it is that if you make a but order on the 13th lets say your movey will be back in your account as soon as you sell it after 3 days. Once you buy it takes 3 days for access. If you sell the 14th you wait 2 more days. If you sell the 16th it will come right back in. It only counts Mon thru Fri thou.
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Scottrade let's me use the money and warns me not to break the free ride rule which I assume would cause my account to be restricted-- then I would have to wait to use my funds until they settle.
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RULES ORIGINALLY ESTABLISHED TO STOP BIG GUYS FROM SHORTING BUT HURTS US AT THIS LEVEL MUCH MUCH MORE. IT'S BEEN SOMETHING I HAVE HAD TO DEAL WITH THE WA I TRADE.
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I use BrokerageAmerica but trade accounts at mytradz.com. The money is available immediately, at least so far and you can open an account online with $200. But they don't trade pink sheets online and they list an additional charge for block orders but I haven't got hit with any on buys or sells. (at least not yet).
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If these addresses are too long and won't work, go to nasd.com and use the search window, type in -- pattern day trader. http://www.nasd.com/
We are really dealing with Exchange rules and SEC enforcement, then have to deal with unique broker policies and their interpretation of these rules.
Scottrade does a good job of understanding what's happening and keeping their traders current of the rules and changes on their HOMEPAGE, go to -MESSAGES.
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with ameritrade apex is allows me to trade with profits a nanosecond after selling. Don't know if apex is different than regular ameritrade
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If you trade frequently, you may qualify as a pattern day trader under the NASD's amended Rule 2520.
How do I know if I'm a pattern day trader?
-------------------------------------------------------------------------------- You will be considered a pattern day trader under NASD and NYSE rules if you buy and sell the same stock or option on the same trading day four or more times within a period of five trading days and this activity makes up more than six percent of your trading activity.
If you meet the definition of a pattern day trader under the guidelines above, you will see two additional fields called Day Trading Cash Buying Power and Day Trading Margin Buying Power when you view your Account Balances page. Day Trading Cash Buying Power represents the cash available for you to purchase and sell non-marginable stocks or options intraday. Day Trading Margin Buying Power represents the cash available for you to purchase and sell marginable stocks intraday. Please note that if you purchase securities and plan to hold them overnight, be sure to use Regulation T buying power figures and not the Day Trading Buying Power.
Know the minimum equity requirements for pattern day trading
Regulations call for a $25,000 minimum equity requirement for pattern day traders designed to address the additional risks inherent in leveraged day trading activities, and to ensure that you are able to cover any losses incurred in your account from the previous day before you place new day trades.
How do I know the minimum equity requirements for pattern day trading?
-------------------------------------------------------------------------------- For pattern day traders, the minimum equity requirement is $25,000. If your equity falls below $25,000, a day trading minimum equity call will be issued on your brokerage account requiring you to deposit additional cash or securities. Account equity is calculated based on the closing prices of securities on the previous market day.
Important: If you execute a day trade (buy and sell the same stock or option on the same trading day) before a day trading minimum equity call is met, your account will immediately be restricted to cash-only transactions for a period of 90-days or until the call is met in accordance with NYSE Rule 431.
Tacamo...
[This message has been edited by tacamo (edited January 13, 2004).]
posted
[QUOTE]Originally posted by dardadog: [B]WAYS TO DEAL WITH IT. DIVIDE PLAYING FUNDS INTO THIRDS SO CONSTANTLY ROLLING MONIES. OPEN TWO INDIVIDUAL ACCOUNTS RATHER THAN JOINT ACCOUNTS WITH SPOUSE. MAKE EACH OTHER "IN CASE OF" ON BOTH. GIVES YOU MORE PLAYING ROOM ANYWAY. PLAY LARGER FOR MARGIN ACCTS.
OTHER WAYS TO DEAL WITH IT: #1 OPEN ACCOUNTS IN YOUR KIDS NAMES WITH YOU AS THE EXECUTOR. #2 I HOLD ACCOUNTS WITH SCOTTRADE-AMERITRADE AND E TRADE. ONE WAY OR THE OTHER I WILL BUY A STOCK IF I WANT IT BAD ENOUGH. ALSO NICE TO HAVE OTHER ACCOUNTS WHEN AMERITRADE WILL NOT LET YOU BUY A PINK SHEET STOCK. RARELY HAVE THAT PROBLEM WITH SCOTTRADE. #3 TO DAYTRADE LEGALLY WITH NO PROBLEMS YOU MUST HOLD 25,000 IN YOUR ACCOUNT/CASH AND STOCKS--SO KEEP 90% OF HOLDINGS IN ONE ACCOUNT SO YOU CAN BE LEGAL. #4 WITH SCOTTRADE IF YOU HAVE A MARGIN ACCOUNT ALL YOU HAVE TO DO IS HOLD THE STOCK OVERNITE AND IT IS NOT CONSIDERED A DAYTRADE. YOUR FUNDS ARE AVAILABLE IMMEDIATELY. CALL YOUR SCOTTRADE BROKER TO CONFIRM. I AM SURE THEY DO NOT OFFER THIS INFORMATION BUT I BELIEVE IT TO BE TRUE. LET ME KNOW IF THAT HAS CHANGED ALSO.
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[QUOTE]Originally posted by glassman: [B]Scottrade let's me use the money and warns me not to break the free ride rule which I assume would cause my account to be restricted-- then I would have to wait to use my funds until they settle.
FYI
ON MY SCOTTRADE ACCOUNT I BROKE THE FREE RIDE RULE THE FIRST TIME AND THEY DID NOT DO ANYTHING. SECOND TIME--THEY CALLED AND TOLD ME AND WARNED ME NOT TO BREAK THE FREE RIDE RULE AND WROTE ME A LETTER CONFIRMING THIS. THE THIRD TIME THEY RESTRICTED THAT ACCOUNT TOTALLY TO SELLS ONLY. I HAD TO TRANFER CASH BALANCE TO ANOTHER ACCOUNT TO USE IT. TOOK ME A MONTH AND A LOT A BEGGING TO GET GET THAT ACCOUNT BACK. THEY MADE ME TRANFER SECURITIES FROM AMERITRADE TO TOTAL OF 10,000 TO THAT ACCOUNT. I HAVE TO HOLD IT THERE FOR AN ADDITIONAL 6 MONTHS TO "GAIN BACK THIER TRUST." I CAN LIQUIDATE THAT ACCOUNT TO CASH WITHIN THE SIX MONTHS AND OF COURSE HAVE MY MONEY OR TRANFER SECURITIES BUT I WILL LOSE THAT MARGIN ACCOUNT FOR GOOD. IT WAS NOT PRETTY. ACCORDING TO THEM IT PUT THEM IN VIOLATION WITH THE SECURITIES AND EXCHANGE COMMISSION AS I AM SURE IT DID- BUT AT THE TIME TIME I WAS ONLY THINKING OF THE DOWNWARD SPIRAL OF THE STOCK I HAD TO SELL. ANYWAY--JUST SO YOU KNOW--THAT IS WHAT HAPPENS WHEN YOU BREAK THE FREE RIDE RULE. SHORTLY AFTER THAT I OPENED MARGIN ACCOUNTS IN MY 4 KIDS NAMES WITH ME AS THE EXECUTOR FOR BACKUP. WHERE THERE IS A WILL THERE IS A WAY!!!!
SOME BROKERS LET YOU USE UNSETTLED MONEY CREDITED TO YOUR ACCOUNT INSTANTLY AND SOME HAVE A 3-DAY RULE (AMERITRADE) AND I BELIEVE E-TRADE STILL ALLOWS YOU TO USE YOUR MONEY INSTANTLY.
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E*TRADE no loger let's you use the money instanly. That was my whole point of starting this post. I don't do enough trading for it to normaly be an issue but it's furstrating for the rules to change (E*TRADE rules that is).
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Thanx for that info Diana-I assumed it would be something like that--I tried it once to seee if I could bail if i had to-- like you said --the downward spiral-- esp with the shorters working hard. I have always followed it since-- and even tho I have watched my profits evaporate. I will often buy on the 2nd day if I expect a morning gap. I have started to sell non-movers at a minor loss to keep the flow even-- esp since the naked shorting seems to be abated.
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posted
yes- and if you don't have 25k in your account you will be sent to the corner-LOL I don't know what they do but Diana's post sounds like a good example.
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Some very good explanations of the rule if you read thru the threads. I violated the rule without knowing it when I first started trading at BrokerageAmerica.com My account got frozen and I could only sell using a broker for 90 days. I opened 2 other accounts while it was frozen and was real careful since then. I asked my broker to explain the rule more clearly and he said If I sell a stock I have held overnight(Stock X) I can use that money immediately to buy another stock (Stock Y). If I then sell another stock I have held overnight (Stock A) I can use the proceeds to buy back into Stock X. I did have margin on that account and I don't know if that made it immediately available or not. Recently- Sincere Thanks to God that account finally got over 25K and available for daytrades.
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Instructions: 1. Please do not reply this message. 2. Send a new question to the SEC experts at http://sec.broaddaylight.com/sec or visit their main site at www.sec.gov Thank you for using Broad Daylight."
I think this has less to do with day trading an more to do with starting to enforce the settlement period rules. If I sell XYZ for $1000 it takes 3 days for the money to actually be put into my account. I think E*TRADE and others were ignoring that rule and are now enforcing it.
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