What is the minimum balance for Margin trading by day traders?
Question:
Then Is this policy is also applicable if we just buy or sell some stocks more than 3 times in 5 days?
PLEASE ANSWER CLEARLY, I WILL SEE THAT THE BEST ANSWERER GETS 20 POINTS.
Answer:
1) $25,000.00 USD
Example 1:
You sell short A on Mon and cover on Tue
You sell short B on Tue and cover on We
You sell short C on We and you cover on Thu
You sell short D on Thu and you cover on Fri
You sell short E on Fri and you cover on Mon
Conclusion:
YOU ARE NOT A DAYTRADER.
YOU EXECUTED 0 DAYTRADES
YOU NEED AT LEAST $2,000.00 USD AT ALL TIMES TO DO THIS.
YOU CAN SELL SHORT OR BUY 1000 STOCKS IN A WEEK OR MORE IF YOU WANT NO RESTRICTIONS FOR THIS TYPE OF TRADES.
Example 2:
You sell short A on Mon and cover on Mon
You sell short B on Mon and cover on Mon
You sell short C on Mon and you cover on Mon
Conclusion:
YOU ARE NOT A DAYTRADER.
YOU EXECUTED 3 DAYTRADES
YOU NEED AT LEAST $2,000.00 USD AT ALL TIMES TO DO THIS.
YOU CAN SELL SHORT 3 STOCKS IN A 5 DAY PERIOD.
THIS IS YOUR LIMIT AND YOU MUST NEVER BREAK THAT LAW.
Example 3:
You sell short A on Mon and cover on Mon
You sell short B on Tue and cover on Tue
You sell short C on Wed and you cover on Wed
Conclusion:
YOU ARE NOT A DAYTRADER.
YOU EXECUTED 3 DAYTRADES
YOU NEED AT LEAST $2,000.00 USD AT ALL TIMES TO DO THIS.
YOU CAN SELL SHORT 3 STOCKS IN A 5 DAY PERIOD.
THIS IS YOUR LIMIT AND YOU MUST NEVER BREAK THAT LAW.
Your get out of Jail Free Card costs $25,000.00 USD
If you don't have $25,000.00 USD YOU CANNOT DAYTRADE.
If you have any questions. Let me know.
If you don't have at least $25,000.00 you really should not daytrade.
THESE LAWS ARE FOR YOUR PROTECTION.
Do not listen to eaglesonaperch she does not know the Law.
Top 4 Answerer in Business & Finance. (Vote for me)
It depends on what 'collateral' stock you use for margin...GE, WMT, MSFT, and some others are high enough quality that you can short and cover other stocks nearly as often as you want.
Using weaker stocks as collateral limits the ammount of stock you can borrow
good luck though.
It's a reference to three day trades, not the number of trades placed over the course of five days (long or short). If you short a stock and then cover that same stock on the same day, it's a day trade. You can short 100 stocks, but if you cover them all the next day, it's not a day trade and wouldn't be subject to the day trade rule. (The same idea applies to long trades).
Just keep in mind, if you are in and out of a stock on the same day three times over a five day period, then the rule applies. If you can hold a trade till the next day, the rule doesn't apply at all.
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