Day Trade Margin Call

themilton

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I was issued a Day Trade Margin Call as the tittle suggest. I'm a new trader and I wasn't completely familiar with this type of margin call. I was under the impression that the only types of margin call I can receive is if my account equity size were to fall below the maintenance requirement. Or if my account were to fall below the $2000.00 minimum required to trade margin or to short stocks.

During the trading day my account did manage to fall below the $2000.00 minimum. However the trade that I took turned in my favor and I was able to bring the account back above $2000.00. I then liquidated my position because of an overnight fear of a gap down and receiving a margin call.

The next day I checked my account there was a notice telling me this. "Your account XXX-xXx, may be restricted because it is subject to a margin call. For more information, including details about what you need to do, please visit your margin call page."

I checked the Margin Call Summary page. The call type was "Day Trade". I made two day trades that day. For a total of 3 in the past 5 days. So I couldn't be considered a PDT.

My question is why would I be issued a margin call if the account minimum is still above $2000.00? I also have no positions open as they were all liquidated that day prior to receiving any margin call. So they wouldn't be able to liquidate any positions.

If I were to deposit the money into my account, will the brokerage take the money? Like a fine?

What is the purpose of a Day Trade Margin Call?

I've yet to call the brokerage because they're closed right now, so I figured I could get some help here just to gauge what I'm facing. Any help is greatly appreciated. As always, Thanks!
 
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Never mind! I recieved the help I needed from my brokerage. Too bad no one here was able to help me in time. :( I guess moderators, you can close this thread since it will not be beneficial to anyone in the future. It will just be another thread with a lot of views and no replys. Thank You!
 
You posted this open a sunday morning when there are very few people actually viewing the forum at all so it's not surprising you wouldn't get a fast response.

Instead of asking the moderator to close the thread right away how about posting how the issue was resolved so others might benefit.

Peter
 
tru, theres a big difference between how many people may be on here on a sunday, and who may be on here on a monday... for all you know, the people who viewed the thread may have been in similar predicaments to you, so was also waiting for a response...
 
dont meet the margin call. you have gotten your self over-leveraged and out of your depth. your trade is WRONG. if you add more money your trade is still wrong and you could end up losing that also...in fact its likely
 
dont meet the margin call. you have gotten your self over-leveraged and out of your depth. your trade is WRONG. if you add more money your trade is still wrong and you could end up losing that also...in fact its likely

That's bad advice. You didn't read his entire post. Also maybe you didn't understand it since this is a regulation only in the USA. His broker is telling him he has a Day Trade Margin Call. That's different from a regular margin call that most people get.

Peter
 
dont meet the margin call. you have gotten your self over-leveraged and out of your depth. your trade is WRONG. if you add more money your trade is still wrong and you could end up losing that also...in fact its likely
Why? It is possible the trader does not want to put all available funds into this broker. What if this broker goes down and all your funds stuck in it? It is sensible to put only required funds, occasionally it may generate margin call. Nothing wrong with it, imho.
 
I'm actually in Afghanistan at the moment. I didn't really think about the time difference. And as far as what day it is. I don't really get days off so most of the time I don't even know what day it is. It's my fault for expecting some sort of rapid response team to help me out when I didn't even think about the timming of my post.

As far as getting my situation resolved. I do understand what happened. The Day Trade Margin Call I recieved was because I went over my Day Trade Buying Power. I didn't know how to calculate the day trade buying power, nor did I know what it was exactly. I was under the impression that as long as you have the funds present. And you didn't become categorized a PDT, then you can trade up to that limit. It turns out that even though you may have the funds present. There is a limit to how much you day trade. It's called the Day Trade Buying Power. For my brokerage it's 4x's the maintenance excess at the start of the day. Being that I held a position over night, my maintenance excess was lower than usual. And I over traded, even though I had the money to. I hope this makes sense. It's actually still a little confusing to me. Because you're given a limit of how much you can buy and sell. Even if it's not on margin. And even if you don't break the day day trade rule.

Honestly all of these rules are very annoying. They say it's too protect the investor. I can understand that after what happened during the great depression. But during those times people were getting 10:1 margin for putting $1,000 down. I'm only getting 1:1 margin. It just makes it really hard for the little guy to earn some money IMHO.

Also, my brokerage will not keep the moeny I deposit as a fine. I was told that it just needs to be deposited to show that I am able to make those trades, and after two days it can be withdrawn.

I hope this helps anyone who may find themselves in a similar situation. Thanks!
 
Right. You were required to deposit funds or be restricted for 90 days. You can't just ignore it as someone stated because it is a day trading margin call. I agree the regulations here are very convoluted and it's too easy to run afoul of them. No wonder retail trading volume is down. It's very depressing for new traders.

Some brokers will calculate and show you the day trade buying power available to you. If not then a quick call to the broker prior to the start of the trading day will help you. Remember you cannot use funds from overnight positions or positions that are closed after 4:00pm New York time for the next day's calculations.

Peter
 
Right. You were required to deposit funds or be restricted for 90 days. You can't just ignore it as someone stated because it is a day trading margin call. I agree the regulations here are very convoluted and it's too easy to run afoul of them. No wonder retail trading volume is down. It's very depressing for new traders.

Some brokers will calculate and show you the day trade buying power available to you. If not then a quick call to the broker prior to the start of the trading day will help you. Remember you cannot use funds from overnight positions or positions that are closed after 4:00pm New York time for the next day's calculations.

Peter

They wouldn't have restricted me for 90 day's just yet. The Margin Call Page also included the following: If you have an outstanding (but not past due) DT Call, you will be entitled to trade on 2 times Maintenance Excess (ME). Once the call becomes past due, your account is limited to trading with only 1 times Maintenance Excess for 90 days or until you deposit the necessary funds to satisfy the call. If you have two unmet DT calls, your account will be closed for 90 days and only liquidating transactions will be allowed.
 
So, it looks like your buying power would have been restricted or reduced to basically cash only if you didn't meet the margin call. This stuff is confusing even for those of us who have been in the business for (too) long :whistling
It's part of the reason I stopped trading stocks.

Peter
 
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