Account Restrictions

[deejaypj 14]

Not sure if the Brokers section is the right area for this but I wanted to see if anyone has come across this issue and what might be the solution. I mistakenly bought the wrong quantity of a stock on Monday and ended up with negative available margin in my account. I closed the trade soon after. It seems I broke some sort of rule with this. As I am new to actual day trading of stock, I wasn't aware of all the rules involved. I tried to do as much research as possible before going live but somehow missed this one. I imagine this is somehow tied to good old USA government regulations. Any way, I am now facing a big restriction on my trading for 90 days and maybe longer. Any ideas on this?

 

Thanks,

 

Patrick

[GordonDK 6]

Hi deejaypj,

 

Do you mean that you bought stocks worth more than your allocated buying power (bp)?

 

Take a look at this: http://www.finra.org/investors/day-trading-margin-requirements-know-rules

 

I have some more specific questions about margin trading, which I'm going to put in another post. So look out for this.

 

 

Br.,

 

Jimmy

[deejaypj 14]

Thanks for the reply Jimmy. Yes, that is what I did. I've been familiar with the pattern day trader regulation regarding 25k in the account. This was an instance when I hit the hotkey one too many times and ended up with way too many shares. It was a mistake and I noticed that my bp went red. I figured if I just closed the position it would sort out, however I received an email from my broker warning me of the issue and it said they would then be monitoring my trading to see if it needed the additional restriction. I then figured that since I wouldn't be doing that again, I'd be okay. They didn't seem to do much monitoring. They just slapped me with a restriction that seems as if I am not allowed to use any margin. Going to call them this week to see what the situation is.

[Robert H 455]

Patrick, I'm surprised your trading platform let that happen. You're with Schwab StreetSmart Edge, correct?

[deejaypj 14]

Yes Robert, it's Schwab and I was thinking the same thing. My shorter term trading (day trading and such) has been Forex and futures up to this point. I had mainly traded Options in this account before coming to BBT. In both Forex and futures I have never been allowed to trade beyond my margin limit, so I wasn't thinking it would be an issue. I don't understand if there is an issue with going over my BP then why allow it in the first place? Anyway, I have no problem changing brokers. After calling them this week I will make a decision.

[Peter S 3]

That's a pretty unimpressive performance by Schwab in my opinion.

 

A bit of a wandering tale this and it's only hearsay but anyway - I was listening in on a Larry Connors webinar and Schwab came up for discussion. One of the traders attending, who I had noticed before was a pretty well informed trader, said that he had played golf with Charles Schwab. He asked Schwab why stock availability for shorting was so limited and Schwab answered "Because shorting is unamerican". Connors was gobsmacked by this, the discussion went around it for a while, it sounded highly credible to me.

 

Anyway, personally I won't be opening an account with Schwab, maybe they're great for some reason or another, but I won't be finding out from direct personal experience. Moving your account is always a possibility.

[deejaypj 14]

Hi Peter, I would tend to believe that story about Schwab, as they are part of the old school when it comes to brokerage firms and the old school thinking definitely leans towards the idea that shorting is unamerican. I actually only have a Schwab account because I was with OptionsXpress and they were bought by Schwab. I figured I would give them a try. Perhaps this experience is the answer to my question regarding whether to stay or not.

 

Thanks everyone for the replies!