Market Basics
The Basics
What are Stocks and Exchange Traded Funds (ETF)?
Market BasicsStocks & ETFsA stock is a type of security that denotes ownership in a corporation. There are two conventional types of stock: common and preferred. Common stock normally entitles the owner to vote at shareholders’ meetings and to...
Why Trade Stock or ETF?
Market BasicsStocks & ETFsParticipate – Stocks are an exciting way to participate in a growing economy and, particularly, in stocks you find interesting or innovative. When an economy is growing, company earnings can increase, jobs are created and...
What You Need to Know About Trading Stocks and ETFs
Market BasicsStocks & ETFsTrading stocks requires you learn how to trade stocks, learn about the markets, learn what drives stock prices, and learn how to decide which stocks to buy and sell. Experienced stock traders always have a plan before...
Margin Trading
Introduction to Margin Trading
Market BasicsStocks & ETFsMargin trading refers to the process of borrowing funds from TradeStation in order to leverage your available capital to trade stocks and options. Margin accounts are required if your trading will include short-selling stock...
Maintenance Margin
Market BasicsStocks & ETFsMaintenance margin is the minimum amount of equity that must be maintained in a margin account. Once a trader or investor has borrowed on margin to buy or sell a stock, the minimum required level of margin is 25% of the...
Example of Buying Stock on Margin
Market BasicsStocks & ETFsA customer deposits $30,000 in their margin account. The initial margin requirement for trading stocks is 50%, which doubles the buying power in the account to $60,000. Remember the maintenance margin requirement is 25%...
Margin Calls
Market BasicsStocks & ETFsIf the stock and option positions in an account go against the trader and their equity falls below the maintenance margin; the broker will initiate a “margin call” and ask the customer to deposit more cash to into their...
Pros and Cons of Margin Trading
Market BasicsStocks & ETFsThe main advantage of margin trading is that is allows customers to leverage their capital to increase profits when the market moves in their favor, and the primary risk and concern of margin trading is that losses will be...
Day Trading Rules
Introduction to Day Trading
Market BasicsStocks & ETFsDay trading refers to buying then selling or selling short then buying the same security on the same day. Just purchasing a security, without selling it later that same day, would not be considered a day trade. Does the rule...
Day Trading Requirements
Market BasicsStocks & ETFsThe rules adopt the term “pattern day trader,” which includes any margin customer that day trades (buys then sells or sells short then buys the same security on the same day) four or more times in five business days. Under...
Why Day Trading Margin Requirements are Important
Market BasicsStocks & ETFsThe primary purpose of the day-trading margin rules is to require that certain levels of equity be deposited and maintained in the margin accounts of Day Traders, and that these levels be sufficient to support the risks...
Day-Trading Minimum Equity Requirements
Market BasicsStocks & ETFsThe minimum equity balance requirements on any day in which you trade is $25,000.01. The required $25,000.01 must be deposited in the account prior to any day-trading activities and must be maintained at all times. Why is...
What is Buying Power
Market BasicsStocks & ETFsThe day trading rules will affect your buying power. You can trade up to four times your maintenance margin excess as of the close of business of the previous day. It is important to note that we may impose a higher minimum...
Day Trading Margin Calls
Market BasicsStocks & ETFsThe rules permit a day trader to trade up to four times the maintenance margin excess in the account as of the close of business of the previous day. If a day trader exceeds the day-trading buying power limitation, the firm...
Day Trading Rules and Cash Accounts
Market BasicsStocks & ETFsDay trading in a cash account is generally prohibited. Day trades can occur in a cash account only to the extent the trades do not violate the free-riding prohibition of Federal Reserve Board’s Regulation T. In general,...
Does the Day Trading Rule Apply Only if I Use Leverage?
Market BasicsStocks & ETFsNo, the rule applies to all day trades, whether you use leverage (margin) or not. For example, many options contracts require that you pay for the option in full. As such, there is no leverage used to purchase the options....
Impact on Withdrawal of Funds
Market BasicsStocks & ETFsUnder the day trading rules, funds used to meet the day-trading minimum equity requirement or to meet any day-trading margin calls must remain in your account for at least two business days (not including the day of deposit...
