Pattern Day Trader - Day Trading Buying Power

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:

  1. the cost of all day trades made during the day; or
  2. 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:

    The shepherd is the brain behind the dog’s brain,
    But his control of dog, like dog’s of sheep
    Is never absolute—that’s the beauty of it.
    —Cecil Day Lewis (1904–1972)

    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)

    It is just as impossible to help reform by conciliating prejudice as it is by buying votes. Prejudice is the enemy. Whoever is not for you is against you.
    John Jay Chapman (1862–1933)

    Genius as an explosive power beats gunpowder hollow; and if knowledge, which should give that power guidance, is wanting, the chances are not small that the rocket will simply run amuck among friends and foes.
    Thomas Henry Huxley (1825–95)