Day Trading Buying Power
The rule increases day trading buying power to up to 4 times a pattern day trader's maintenance margin excess. For example, if a trader has $100,000 worth of equities, the leverage ratio is 4:1 meaning that it can buy securities of up to $400,000.
For day trading in equity securities, the day trading margin requirement shall be 25% of either:
- the cost of all day trades made during the day; or
- the highest open position during the day.
If a client's day trading margin requirement is to be calculated based on the latter method, the brokerage must maintain adequate time and tick records documenting the sequence in which each day trade is completed. Time and tick information provided by the customer is not acceptable.
Read more about this topic: Pattern Day Trader
Famous quotes containing the words day, trading, buying and/or power:
“Condemned to Hope’s delusive mine,
As on we toil from day to day,
By sudden blasts or slow decline
Our social comforts drop away.”
—Samuel Johnson (1709–1784)
“His farm was “grounds,” and not a farm at all;
His house among the local sheds and shanties
Rose like a factor’s at a trading station.”
—Robert Frost (1874–1963)
“screenwriter
I spent the whole afternoon being pushed around by middle-class females buying things they can’t possibly afford!”
—Arthur Wimperis (1874–1953)
“Purchasing power is a license to purchase power.”
—Raoul Vaneigem (b. 1934)