Thread: Margin acct for active/day traders

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  1. #1

    Default Margin acct for active/day traders

    When a pattern day trader purchases stocks with margin account, does s/he have to sell some stocks at the close of day to keep her positions below regular, non-marigin buying power? Otherwise, can s/he just keep the stocks s/he bought with margin overnight?
    Let's assume that I have $10k in account. I believe that i can buy ETF, for which margin requirement is 50, for $20k. 1)If I just bought this ETF(one time a day) for 20k and did not sell that day, can I keep all of them overnight? 2)If I bought this ETF for 20k, sold all of them for 21k and bought them back for 21k, can I keep all of them overnight? Or should I sell for at least 11k before the close of market? Thanks a lot!!!
  2. #2

    Default

    Typically, when you're deemed a PDT, you get 4x intraday buying power. So if you have $10k cash in your account, you can buy up to $40k of (fully marginable) stock. But that 4x buying power is for the DAY ONLY. You'll need to sell at least $20k of that position before market close (to get back to 2x overnight margin) or you'll get a margin call.
  3. #3

    Default

    I'm pretty sure with only 10K you wont be given daytrading buying power.You would 25K min for that. Therefore you could hold any stock overnite or as long as you want. Once your broker "bestows" you with DT buying power,yes you will need to close those positions before market on close.
  4. #4

    Default

    You're right, buckhorn, you won't be given day trading buying power with less than $25k. I only used $10k in my example because Matt did. I should have said $25k to avoid confusion.
  5. #5

    Default

    You do realize margins typically charge in the vicinity of 8 percent interest,
    add to this your 2 percent broker's fee and that's 10 percent your stock
    has to gain just for you to break even.

    Why I don't trade on margin.

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