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Posted by Paul on July 2, 2008, 2:22 pm
Hi Folks:
Well, I finally did it....I blew my priviledge to trade up to 3
daytrades per week by accidentally doing 4 intraday trades in less
than five days. This occurred through IB, Interactive Brokers. My
"Day Trades Left" status now reads: 0,0,0,0, instead of 3,3,3,3. So
now I have to get $25,000 into my margin account before I can daytrade
again. My understanding is that this balance must be MAINTAINED at all
times for me to continue having unlimited DT priviledges.
But my question is: What happens if I then drop below the $25,000
balance later on? Do I go from unlimited DT's back to a maxium of 3
DT's per week (3,3,3,3), or do I go back to NO daytrade priviledges at
all (0,0,0,0)? Any help on this would be most appreciated....thanks in
advance. - Paul.
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Posted by Mail Man on July 3, 2008, 4:17 am
"Paul" wrote:
>
> Well, I finally did it....I blew my priviledge to trade up to 3
> daytrades per week by accidentally doing 4 intraday trades in less
> than five days. This occurred through IB, Interactive Brokers. ...
>
IB, huh? OK then, please go to Elite Trader Forums here and register (it's
FREE! for EVERYBODY):
http://www.elitetrader.com/vb/
Once registered, log-in and go to the "Retail Firms" Forum at this link:
http://www.elitetrader.com/vb/forumdisplay.php?s=4b822b5e0433642ece964741f283ceb8&forumid=2
Or, in case this link doesn't work, once logged-in, just go back to the Main
Page (the first link, above), scroll down until you see the "Retail Firms"
link and click on this, instead.
Now, post your query about the daytrade limit and $25,000 account size
requirement in a new post on this E.T. forum. A couple of IB
employees/representatives regularly monitor this particular E.T. forum, and
you actually get FAR FASTER, BETTER and MORE RESPONSIVE customer service on
E.T. than from any of IB's official contact points, either by telephone or
by email -- even so, you may have to give it a couple of days to get an
informed answer and endure snipes by a few of the "know-it-alls" who also
post there!
For what it's worth, the $25,000 requirement is a FEDERAL ***STOCK***
DAYTRADING REQUIREMENT, not just an IB thing, and my understanding is that
you MUST maintain an account size of at least $25,000 at all times to
daytrade STOCKS. This limitation DOES NOT apply to commodities/futures
trading of the major CME stock indexes (Dow, NASDAQ, S&P, Russell, and their
respective Minis, etc.), but to stocks, only. Under these circumstances
(i.e., with a $25,000+ account size), you can also get up to 4:1 leverage on
your stock trades (DAYTRADES ONLY!, I think -- ask about this, too), as
opposed to the normal 2:1 leverage one gets on a standard stock brokerage
account.
It seems to me that you should be able to daytrade these index futures at IB
WITHOUT the $25,000 account size requirement, as the margin requirements on
many of these is only about $500 per contract. However, this is for
DAYTRADE OF INDEX ***FUTURES*** ONLY -- if you don't get your contract
closed out before EOD, then you will get nailed for the FULL and HUGE margin
requirements on each of these. You may also be able to avoid the $25,000
account size requirement by daytrading Exchange Traded Funds (ETFs), which
your account at IB also allows you to do, so be sure to ask about this, as
well.
And also, as long as your account size is less than $25,000, be a little
more careful not to exceed your "non-daytrade" limitation. If you do exceed
this limitation and don't daytrade any other STOCKS for 30 days or so, IB
will reset your limit back to "3," and you can go back to daytrading a
couple stocks per week without the $25,000 account size requirement. I am
pretty sure you are not, at this point, required to fill your account to
$25,000+, as long as you refrain from any further "daytrades" for at least
ONE MONTH.
You are only BARRED from any further daytrades until this time period
passes, so you need not worry about any kind of "margin call" or any other
type of large-scale punitive administrative "fund requisition" from your
account by IB -- they will not take ANY funds from your account or close any
of your positions. You have NOT done anything wrong. Why? Because IB's
policy of automatically placing this bar on your account has PREVENTED you
from doing anything wrong, thereby PROTECTING both YOUR and IB's fiduciary
interests!!!
I am probably not entirely informed about this, as I trade only
futures/commodities contract outrights or spreads on the CBOT, CME, NYMEX,
NYBOT/ICE, COMEX, MGEX and KCBOT and do not trade any items on the NYSE,
NASDAQ, AMEX, CBOE, or any other electronic and/or foreign stock or stock
options related exchange. As a result, I am not subject to this account
size requirement. So, follow the above suggestion and you will get your
information directly from the horse's mouth ... ;-].
Mike Collier
Oak Harbor, WA
|
|
Posted by Paul on July 5, 2008, 3:56 am
>"Paul" wrote:
>>
On Thu, 3 Jul 2008 01:17:39 -0700, "Mail Man"
>"Paul" wrote:
>>
>> Well, I finally did it....I blew my priviledge to trade up to 3
>> daytrades per week by accidentally doing 4 intraday trades in less
>> than five days. This occurred through IB, Interactive Brokers. ...
>>
>
>IB, huh? OK then, please go to Elite Trader Forums here and register (it's
>FREE! for EVERYBODY):
Hi Mike:
Thank you for your detailed reply to my question -- I really
appreciate your taking the time. Before I get back to the matter at
hand, here are a few things I've learned about IB from trading with
them over the years. Overall, I must say that they have been very
reliable and I like having them as my broker. I realize that the
"pattern daytrade rule" is SEC mandated and thus not open to question
by brokers or retail clients, but I still feel the rule is unfair.
I know that IB also applies the rule to stock-based options (including
ETF-related index options such as SPY, QQQQ, DIA, MDY, etc.), and also
to single stock futures on both index ETF's and regular stocks. IB's
initial margin requirement for the ES "emini" futures contract is
around $3,000 USD. Incidentally, the 4:1 stock leverage for margin
accounts applies not only to daytrades but swing trades as well.
I have traded both futures and forex for about 8 years, but I actually
don't like high leverage for overnight trading unless I'm more or less
hedged. As you say, the pattern daytrade rule does not apply in the
futures and forex realms, but I was surprised to find that IB
"penalized" my single stock futures trades on index ETFs by
subtracting one of my 3 daytrades per week if I executed a round trip
on the same day.
What happened in my case was that I accidentally got into a situation
where I was under-margined for overnight holds on several open stock
options positions, and didn't realize that IB would therefore
auto-liquidate these prior to 4pm EDT. Which they did, and thus the
dreaded "Pattern Daytrader" GUI popped up to inform me that I would
from now on require the $25,000 minimum for any further stock-related
daytrades.
Since the time that I posted my original question, I've decided to
just go ahead and deposit enough funds to bring my account up above
the $25,000 mark. Knowing that this level must always be maintained is
stressful, but I guess I don't have any choice. I think I'll mostly
stay with hedged swing positions from now on, using straddles and
other volatility spreads with stock options. For datyrades, I plan to
implement system-based money management rules for ETF's and stocks,
which I actually like much better than the more volatile futures
contracts. Once again, Mike, many thanks again for your helpful
information and Good Trading! - Paul.
On Thu, 3 Jul 2008 01:17:39 -0700, "Mail Man"
>"Paul" wrote:
>>
>> Well, I finally did it....I blew my priviledge to trade up to 3
>> daytrades per week by accidentally doing 4 intraday trades in less
>> than five days. This occurred through IB, Interactive Brokers. ...
>>
>
>IB, huh? OK then, please go to Elite Trader Forums here and register (it's
>FREE! for EVERYBODY):
>
>http://www.elitetrader.com/vb/
>
>Once registered, log-in and go to the "Retail Firms" Forum at this link:
>
>http://www.elitetrader.com/vb/forumdisplay.php?s=4b822b5e0433642ece964741f283ceb8&forumid=2
>
>Or, in case this link doesn't work, once logged-in, just go back to the Main
>Page (the first link, above), scroll down until you see the "Retail Firms"
>link and click on this, instead.
>
>Now, post your query about the daytrade limit and $25,000 account size
>requirement in a new post on this E.T. forum. A couple of IB
>employees/representatives regularly monitor this particular E.T. forum, and
>you actually get FAR FASTER, BETTER and MORE RESPONSIVE customer service on
>E.T. than from any of IB's official contact points, either by telephone or
>by email -- even so, you may have to give it a couple of days to get an
>informed answer and endure snipes by a few of the "know-it-alls" who also
>post there!
>
>For what it's worth, the $25,000 requirement is a FEDERAL ***STOCK***
>DAYTRADING REQUIREMENT, not just an IB thing, and my understanding is that
>you MUST maintain an account size of at least $25,000 at all times to
>daytrade STOCKS. This limitation DOES NOT apply to commodities/futures
>trading of the major CME stock indexes (Dow, NASDAQ, S&P, Russell, and their
>respective Minis, etc.), but to stocks, only. Under these circumstances
>(i.e., with a $25,000+ account size), you can also get up to 4:1 leverage on
>your stock trades (DAYTRADES ONLY!, I think -- ask about this, too), as
>opposed to the normal 2:1 leverage one gets on a standard stock brokerage
>account.
>
>It seems to me that you should be able to daytrade these index futures at IB
>WITHOUT the $25,000 account size requirement, as the margin requirements on
>many of these is only about $500 per contract. However, this is for
>DAYTRADE OF INDEX ***FUTURES*** ONLY -- if you don't get your contract
>closed out before EOD, then you will get nailed for the FULL and HUGE margin
>requirements on each of these. You may also be able to avoid the $25,000
>account size requirement by daytrading Exchange Traded Funds (ETFs), which
>your account at IB also allows you to do, so be sure to ask about this, as
>well.
>
>And also, as long as your account size is less than $25,000, be a little
>more careful not to exceed your "non-daytrade" limitation. If you do exceed
>this limitation and don't daytrade any other STOCKS for 30 days or so, IB
>will reset your limit back to "3," and you can go back to daytrading a
>couple stocks per week without the $25,000 account size requirement. I am
>pretty sure you are not, at this point, required to fill your account to
>$25,000+, as long as you refrain from any further "daytrades" for at least
>ONE MONTH.
>
>You are only BARRED from any further daytrades until this time period
>passes, so you need not worry about any kind of "margin call" or any other
>type of large-scale punitive administrative "fund requisition" from your
>account by IB -- they will not take ANY funds from your account or close any
>of your positions. You have NOT done anything wrong. Why? Because IB's
>policy of automatically placing this bar on your account has PREVENTED you
>from doing anything wrong, thereby PROTECTING both YOUR and IB's fiduciary
>interests!!!
>
>I am probably not entirely informed about this, as I trade only
>futures/commodities contract outrights or spreads on the CBOT, CME, NYMEX,
>NYBOT/ICE, COMEX, MGEX and KCBOT and do not trade any items on the NYSE,
>NASDAQ, AMEX, CBOE, or any other electronic and/or foreign stock or stock
>options related exchange. As a result, I am not subject to this account
>size requirement. So, follow the above suggestion and you will get your
>information directly from the horse's mouth ... ;-].
>
>Mike Collier
>Oak Harbor, WA
|
|
Posted by Mail Man on July 5, 2008, 5:24 am
"Paul" wrote:
>
> Thank you for your detailed reply to my question -- I really
> appreciate your taking the time. Before I get back to the matter at
> hand, here are a few things I've learned about IB from trading with
> them over the years. Overall, I must say that they have been very
> reliable and I like having them as my broker. I realize that the
> "pattern daytrade rule" is SEC mandated and thus not open to question
> by brokers or retail clients, but I still feel the rule is unfair.
>
> I know that IB also applies the rule to stock-based options (including
> ETF-related index options such as SPY, QQQQ, DIA, MDY, etc.), and also
> to single stock futures on both index ETF's and regular stocks. IB's
> initial margin requirement for the ES "emini" futures contract is
> around $3,000 USD. Incidentally, the 4:1 stock leverage for margin
> accounts applies not only to daytrades but swing trades as well.
>
> I have traded both futures and forex for about 8 years, but I actually
> don't like high leverage for overnight trading unless I'm more or less
> hedged. As you say, the pattern daytrade rule does not apply in the
> futures and forex realms, but I was surprised to find that IB
> "penalized" my single stock futures trades on index ETFs by
> subtracting one of my 3 daytrades per week if I executed a round trip
> on the same day.
>
> What happened in my case was that I accidentally got into a situation
> where I was under-margined for overnight holds on several open stock
> options positions, and didn't realize that IB would therefore
> auto-liquidate these prior to 4pm EDT. Which they did, and thus the
> dreaded "Pattern Daytrader" GUI popped up to inform me that I would
> from now on require the $25,000 minimum for any further stock-related
> daytrades.
>
> Since the time that I posted my original question, I've decided to
> just go ahead and deposit enough funds to bring my account up above
> the $25,000 mark. Knowing that this level must always be maintained is
> stressful, but I guess I don't have any choice. I think I'll mostly
> stay with hedged swing positions from now on, using straddles and
> other volatility spreads with stock options. For datyrades, I plan to
> implement system-based money management rules for ETF's and stocks,
> which I actually like much better than the more volatile futures
> contracts. Once again, Mike, many thanks again for your helpful
> information and Good Trading! - Paul.
>
WOW! And, thank YOU for the update! This is really good stuff to know.
While I am currently trading with Infinity Futures (Extremely good service
but, as I chose their RaN Order Platform to get special Pit access, along
with all Globex, their RT charge is $25 per contract -- very satisfied,
nonetheless), I will be shifting a great deal of this account over to IB
within the next year. I intend to eventually pull "excess" funds from my
futures trades into a long term interest-bearing stock "portfolio."
IB is a perfect brokerage for this, as everything I need in both stocks and
futures is under one roof in their Universal Account. Also, IB's RTs are
much less per futures contract (ca. $5 per RT!). Additionally, Real Time
futures data is included FREE along with their TWS (just a $30/month
"inactivity fee" which I will easily cover with just 1 spread lot per
month!), which also supports Amibroker, in which I am extremely interested.
IB's futures trading access unfortunately limits me to "most" Globex trades,
only, while Infinity gives me access to ALL U.S. PIT and Globex (electronic)
futures trades. As I become more familiar with what I am doing, IB's Globex
trade depth is going to be easily sufficient for my needs.
And, the usually IMMEDIATE fills on the Globex are, for purposes of
slippage, much preferable to the sometimes 15-minute fills I have
occasionally gotten in the Grain and Livestock Open Outcry Pits, although,
since I am trading futures spreads only at this time, the interaction
between the offsetting contracts overcomes this to a very great degree.
When I get ready to seriously increase my lot sizes, I will DEFINITELY have
to make the move to IB.
Sorry to hear about the ETF allocation SNAFU. Just about month ago, I made
a REALLY STUPID (I KNEW better!) order entry error that cost me about
$1,700 -- fortunately, my account is still a long ways into profit (over 65%
in the last 7 months -- opened in Dec. 2007). Sad to say, I guess this is
how one learns to trade each of our respective markets; i.e., the "cost of
education."
Best of luck to you, and I hope you get the answers you need. I know IB has
been making "certain adjustments" over the last few months, so my own
year-old+ research on them is now somewhat outdated. If I had not gone with
Infinity for the greater futures trade access and their great customer
service, IB would have been my first choice -- I am fairly computer-savvy,
know how to read and take advantage of extensive user's manuals and don't
fear IB's lack of service.
Mike Collier
Oak Harbor, WA
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|
Posted by Paul on July 6, 2008, 7:02 pm
Thanks again, Mike...Best of Luck to you as well! - Paul
On Sat, 5 Jul 2008 02:24:32 -0700, "Mail Man"
>
>WOW! And, thank YOU for the update! This is really good stuff to know.
>While I am currently trading with Infinity Futures (Extremely good service
>but, as I chose their RaN Order Platform to get special Pit access, along
>with all Globex, their RT charge is $25 per contract -- very satisfied,
>nonetheless), I will be shifting a great deal of this account over to IB
>within the next year. I intend to eventually pull "excess" funds from my
>futures trades into a long term interest-bearing stock "portfolio."
>
>IB is a perfect brokerage for this, as everything I need in both stocks and
>futures is under one roof in their Universal Account. Also, IB's RTs are
>much less per futures contract (ca. $5 per RT!). Additionally, Real Time
>futures data is included FREE along with their TWS (just a $30/month
>"inactivity fee" which I will easily cover with just 1 spread lot per
>month!), which also supports Amibroker, in which I am extremely interested.
>IB's futures trading access unfortunately limits me to "most" Globex trades,
>only, while Infinity gives me access to ALL U.S. PIT and Globex (electronic)
>futures trades. As I become more familiar with what I am doing, IB's Globex
>trade depth is going to be easily sufficient for my needs.
>
>And, the usually IMMEDIATE fills on the Globex are, for purposes of
>slippage, much preferable to the sometimes 15-minute fills I have
>occasionally gotten in the Grain and Livestock Open Outcry Pits, although,
>since I am trading futures spreads only at this time, the interaction
>between the offsetting contracts overcomes this to a very great degree.
>When I get ready to seriously increase my lot sizes, I will DEFINITELY have
>to make the move to IB.
>
>Sorry to hear about the ETF allocation SNAFU. Just about month ago, I made
>a REALLY STUPID (I KNEW better!) order entry error that cost me about
>$1,700 -- fortunately, my account is still a long ways into profit (over 65%
>in the last 7 months -- opened in Dec. 2007). Sad to say, I guess this is
>how one learns to trade each of our respective markets; i.e., the "cost of
>education."
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