Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. It is important to note that the Securities Investor Protection Corporation (SIPC) may protect up to $500,000 for each customer’s securities account, with a limitation of $250,000 in claims for cash. These funds are required to support the risks associated with day-trading activities. The money must be in the brokerage account because that is where the trading and risk is occurring. securities industry) at substantial risk. This type of activity is prohibited, as it would put your firm (and indeed the U.S. It is saying you should be able to trade solely on the firm’s money without putting up any of your own funds.
This would in effect be a 100 percent loan to you to purchase equity securities. Why do I have to fund my account at all? Why can’t I just trade stocks, have the brokerage firm mail me a check for my profits or, if I lose money, I’ll mail the firm a check for my losses? If the account falls below the $25,000 requirement, you will not be permitted to day trade until you deposit cash or securities in the account to restore the account to the $25,000 minimum equity level. What happens if the equity in my account falls below the minimum equity requirement? Each day-trading account is required to meet the minimum equity requirement independently, using only the financial resources available in the account. No, you can’t use a cross-guarantee to meet any of the day-trading margin requirements. Can I cross-guarantee my accounts to meet the minimum equity requirement? You can meet the $25,000 minimum equity requirement with a combination of cash and eligible securities. Does the $25,000 minimum equity requirement have to be 100 percent cash or could it be a combination of cash and securities?
#Tradestation minimum requirements free#
In fact, firms are free to impose a higher equity requirement than the minimum specified in the rules, and many of them already had imposed a $25,000 requirement on day-trading accounts before the day-trading margin rules were revised. The majority of firms felt that in order to take on the increased intra-day risk associated with day trading, they wanted a $25,000 “cushion” in each account in which day trading occurred. In determining whether the existing $2,000 minimum equity requirement was sufficient for the additional risks incurred with day trading, we obtained input from a number of brokerage firms, since these are the entities extending the credit. The brokerage firm is the lender and the customer is the borrower. The credit arrangements for day-trading margin accounts involve two parties - the brokerage firm processing the trades and the customer. How was the $25,000 requirement determined? Accordingly, the higher minimum equity requirement for day trading provides the brokerage firm a cushion to meet any deficiencies in the account resulting from day trading. Therefore, there is no collateral for the brokerage firm to sell out to meet margin requirements and collateral must be obtained by other means. The typical day trader, however, is flat at the end of the day (i.e., he is neither long nor short securities). This collateral could be sold out if the securities declined substantially in value and were subject to a margin call. As a result, the $2,000 minimum equity requirement was not created to apply to day-trading activities Rather, the $2,000 minimum equity requirement was developed for the buy-and-hold investor who retained securities collateral in his/her account, where the securities collateral was (and still is) subject to a 25 percent regulatory maintenance margin requirement for long equity securities. The minimum equity requirement of $2,000 was established in 1974, before the technology existed to allow for electronic day trading by the retail investor. Why is the minimum equity requirement for pattern day traders higher than the current minimum equity requirement of $2,000? The required $25,000 must be deposited in the account prior to any day-trading activities and must be maintained at all times. The minimum equity requirements on any day in which you trade is $25,000.
0 kommentar(er)
