Stock Trading and Other Things

Does scottrade or anyother online broker charge interest for margins for intraday trading?

I am totally new to US equity trading. Am in the process of learning things and hence am looking forward for guidance from u guys.
From the researches i have made ,have found that scottrade is good for online trading in US for beginners. Hence i would like to know if they charge interest for margin used for intraday trading.

Thanks in advance
MJ

Public Comments

1. Yes Scottrade is a good firm.

All brokerage firms must follow the same rules and regulations. Yes, all firms must charge you interest on any debit balance that you carry in your account, whether it's for 1 day or many days.

However, becareful, if you going to do intra-day trading you may be subject to the day trading rule which requires you to have margin account that requires you to maintain a minium equity of $25,000 at all times

Here's a summary of the rule
The rules adopt a new 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, provided the number of day trades are more than six percent of the customer's total trading activity for that same five-day period. Under the rules, a pattern day trader must maintain minimum equity of $25,000 on any day that the customer day trades. The required minimum equity must be in the account prior to any day-trading activities. If the account falls below the $25,000 requirement, the pattern day trader will not be permitted to day trade until the account is restored to the $25,000 minimum equity level
The rules permit a pattern 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 pattern day trader exceeds the day-trading buying power limitation, the firm will issue a day-trading margin call to the pattern day trader. The pattern day trader will then have, at most, five business days to deposit funds to meet this day-trading margin call. Until the margin call is met, the day-trading account will be restricted to day-trading buying power of only two times maintenance margin excess based on the customer's daily total trading commitment. If the day-trading margin call is not met by the fifth business day, the account will be further restricted to trading only on a cash available basis for 90 days or until the call is met.

In addition, the rules require that any funds used to meet the day-trading minimum equity requirement or to meet any day-trading margin calls remain in the patter day trader's account for two business days following the close of business on any day when the deposit is required. The rules also prohibit the use of cross-guarantees to meet any of the day-trading margin requirements.