Day Traders Important Notice
Day trading activity of any kind is not permitted in a margin account that starts the trading day with less than $25,000 in equity.
In order to enforce day trading activity, we are required to restrict the trading activity in accounts that have been deemed “Pattern Day Traders” and have fallen below the $25,000 minimum equity required. If your account falls into this category, you will be prevented from entering any opening transactions until your account equity is increased to $25,000 or above.
You may be deemed a “Pattern Day Trader” by any of the following means:
- If you execute four (4) or more day trades within five (5) business days. A day trade is opening and then closing a position in the same stock or option the same day.
- If you state on the new account application "I do intend to use the account for day-trading purposes." (This is part of the Day-Trading Risk Disclosure Statement on the new account form)
- If you advise us either in writing or by e-mail that you intend to day trade.
If you are a “Pattern Day Trader” and are unable to deposit funds and/or securities to raise your account equity to $25,000 you must discontinue day trading immediately.
If you would like to maintain your account as a margin account, and do not intend to day trade, you may notify us in writing and we will reinstate your account as a non-day trading margin account.
If you would like to continue to day trade with settled funds you may notify us in writing that you would like your account to be changed to a cash account. If you wish to change your account to a cash account you need to be aware of the following:
Cash Accounts may only day trade with “settled funds”. This means that if you buy and sell the same security on the same day you will be unable to use the funds again until the settlement date for the sell transaction. Settlement is one business day after the trade date for options, three business days after the trade date for equities.
Cash Accounts may not sell stocks short.
Cash Accounts that are approved for options may buy and sell long options, and may sell options which are covered by the underlying long stock position (covered calls), but will not be approved for spreads, straddles, or uncovered option transactions of any kind.
We will accept a written request to switch your account to a cash account if you do not have a margin debit balance or hold a spread, straddle, or uncovered short option position in your account. The request must be signed by all account holders. If you choose to change to a cash account you must remain a cash account for 90 days. After 90 days if you would like your account changed back to a margin account you must complete a new margin agreement and submit for approval.
We appreciate your business and your understanding as we seek to maintain compliance with the directives of our regulators. If you have any questions or need clarification of any of the information contained in this letter please do not hesitate to contact us at (888) 781-0283.