Let's pretend I have $30,000 and I only play with $5000 of it and leave $25,000 for legal daytrade minimum purposes. I also have a margin on this pretend account. Could I be able to make 10+ daytrades with 1 company in one day and not get penalised for it?

Yes, you can daytrade on this account while leaving $25K untouched. Few things though to mentioned over here is that you will have margin as much as $50K (depending on the cash you have in the a/c) but you will be in position to use margin only in proportion of your own funds you are using for the trade. In this case to meet the requirement of "Minimum Start Position Equity of 50%", even if your total margin may be $50K, if you use only $5K for actual trade, you will only get extra $5K.

Some other newbie questions of mine. Will I get charged the 8.25% APR on my total equity or on my borrowed funds? If I'm only using a margin account to get the benifit of funds being transferred back into my account (buying power) within minutes (no money borrowed), every time I do a day trade and the funds go back into my account, will that build some sort of a margin or fee, other than $4.50 per trade, that will have to pay?

Well, let me rephrase that. If I do a day trade with $5000 my and my buying power and money go back into normal within 10 minutes... is that really my money or is it a margin $5000 that I have to pay 8.25% APR on?

Let's say you have $30,000. or $300,000.

You buy Goog 100 times at 500 per 500 which equals $250k. You do this 500 times a day as I have done in the past. I have carried in other brokerages $1.5 million with $600 cash with the 4x buying power. As long as you close the Day out with no securities you will not be charged interest. If you made $2000 on your ten trades you would have $32k on your $30k which you used $5k at 4x Buying Power You would have not incurred margin interest. Margin Interest occurs when you hold over your $30k overnight. Say you buy $45k worth of XOM you pay for the excess of $15k borrowed funds at the current Margin rate which should be fairly low now.

eric72:

Let's say you have $30,000. or $300,000.

You buy Goog 100 times at 500 per 500 which equals $250k. You do this 500 times a day as I have done in the past. I have carried in other brokerages $1.5 million with $600 cash with the 4x buying power. As long as you close the Day out with no securities you will not be charged interest. If you made $2000 on your ten trades you would have $32k on your $30k which you used $5k at 4x Buying Power You would have not incurred margin interest. Margin Interest occurs when you hold over your $30k overnight. Say you buy $45k worth of XOM you pay for the excess of $15k borrowed funds at the current Margin rate which should be fairly low now.

Awesome! Thanks for the information!

These may seem like a few newbie questions... because they are:

If I were to leave my $5K in something overnight (no borrowed money) will I get charged the 8.25% on that?

If I borrow money for only two days, (keep the shares overnight and sell the next day) will I get charged interest only on the 2 days that I had it?

If I were to day after day trades (buy on monday, sell tuesday, buy wednesday, sell thursday, buy friday) will I get charged margin fees by any chance?

In all of this I will not be borrowing money, I will only use what I have.

Somehow you are missing something really, really fundamental. People pay interest to borrow money. When they do not borrow money they do not pay interest.

If you go to a hotel on Monday night and you sleep there and leave on Tuesday, do you pay for two nights? Of course not. Borrowing money works the same way. If you borrow money on Monday and repay it on Tuesday you pay interest for one day. And again, if you don't borrow any money you don't pay any interest.

Maybe if you could explain how you envision what margin is it would be easier to understand where you are coming from and where your understanding is flawed.

You would do well to get a better handle on what is going on here before you begin to trade. The tuition for an education in the market is never cheap but there is no sense in paying a lot more than you have to.

Uncle Billy:

Somehow you are missing something really, really fundamental. People pay interest to borrow money. When they do not borrow money they do not pay interest.

If you go to a hotel on Monday night and you sleep there and leave on Tuesday, do you pay for two nights? Of course not. Borrowing money works the same way. If you borrow money on Monday and repay it on Tuesday you pay interest for one day. And again, if you don't borrow any money you don't pay any interest.

Maybe if you could explain how you envision what margin is it would be easier to understand where you are coming from and where your understanding is flawed.

You would do well to get a better handle on what is going on here before you begin to trade. The tuition for an education in the market is never cheap but there is no sense in paying a lot more than you have to.

I kindof figured that but I was just making 100% sure there wasn't any hidden fees or hidden things like that. Thank you for clearing that up for me by the way. As for me trading, I've already got some experience on that on a regular account, I'm up around 36% so far. The reason I ask these questions about the margin account is because I'd like to get the margin account feature where once you sell, your buying power goes back to normal even after a day trade. And yes I ofcourse know the rules about day trading and how many per week and so on. I do however have another question: Once you do a daytrade and your buying power goes back to normal, if you were to buy something that day would it be on margin because your daytrade is still going through the 3 day clearing?... or does the 3 day clearing even exist on a margin account?

All stock trades clear T+3. The type of account has no bearing on it.

Billy

 

what about option trades ?

 

and so if T+3 to clear......then when I use the money from selling a position immediately to buy another, I am by that borrowing money ?