Margin Buying Power - this number is around account balance x 2
Day Trade Buying Power - this number is around account balance x 4
When your account is tagged as a daytrader, you just have to keep $25,000 account value in your account at any time.
Let's say if your account value is only $25,000 right now. You can hold this $25,000 in stocks - but keep in mind that stocks can fluctuate and go down. So as soon as your account gets under $25,000 account value, you would be in violation.
I think for the first violation, they just give you a warning. For the second violation, they take away your margin ability.
You should not be able to use the entire margin account, it sits there to protect the firm if you owe at the close of business. You should be able to take positions to a percentage of the amount in that account.
There should be a phone number, email address or website on those notices telling you why you are getting them; contact them for clarification.
You should ask the brokerage account these questions.
I have $50,000 in my margin account and I've been getting hit with some day trade notices. I want to avoid these notices. I have been trading all of the $50,000 at a time. I guess this activity what is tripping the day trade notices.
Do I have to keep $25,000 cash in the account and leave it alone. Can I then trade the extra $25,000 as many times I as I want during the day?
What if I have total of $55,000 in the account I don't touch $25,000 to avoid day trade notices can I then use the entire $30,000 to trade with as many times as I want.
I understand the rules of 3 day trades in 5 days. I don't need a re-explanation of that. I want to know the cash limits. Or Buying Power.
Is there max? What if I have $225,000 dollars in an account can I trade with the $200,000 as long as I keep the $25,000 cash in the account untouched.
