Stock Trading and Other Things

Help a beginner with some clarifications about day trading with 25k+ margin account?

Help a beginner with some clarifications about day trading with 25k+ margin account?
I am a beginner who has begun to day trade as a second job. My first week was profitable however I received a good faith violation in result of some misinterpretation the rules. I still have some lingering questions about some of the rules and regulations of day trading and I would be extremely grateful if someone can help me sort out some questions before I continue to day trade.

1. The account contains 25k+ in assets that aren't cash and a good amount of cash, my marginal buying power seems to only be derived from my holdings and not my cash. Is there any way to use my available cash as leverage to increase my margin buying power or is margin leverage only derived from securities held?

2. Also when you buy with margin you are not fully borrowing with credit right? Every stock is different in the amount % you are able to borrow. You still have to wait for cash settlements from the cash portion of your purchases right? Margin buying does not eliminate settlement dates but will only increase your buying power b/c your using less cash per purchase?

3. Also there seems to only be advantages when classified as a pattern day trader since it increases your buying power by 4. Are there any negatives associated with the classification other then the 25k+ min account requirement?

4. My last question is about the dreaded margin call. Does it require me to maintain 25k in assets minus cash at all times or is it just 25k in my total account balance? Will unsettled funds qualify?

Public Comments

1. Judging by your question you are not ready to trade/invest let alone day trade.
Before any one spend $.01 in the market they should know what they're doing, why they are doing it, how to do it, and the rules governing you doing it.

1-Buying power is computed by
50% of total market value of marginable securities (stocks >$5)
+ plus cash (in good funds)
less (minus) debit balance
In a margin account you can always b uy for twice your available credit balance and 50% of your marginable securities

2-When you buy in your margin account and do not put up 100% of the purchase amount YES you are borrowing.
All stocks selling above $5 have the same loan value (50%) unless restricted by the B/D or the exchange.
Margin DOES NOT eliminate settlement date. All trades in the securities industry are posted to your account as of the settlement date of the trade however, margin requirements are calculated on the day of trade.

3-NO, the buying power of a pattern day trader is no increased 4x.
The $25,000 requirement for a "pattern trader" is not a $25,000 balance but rather a minimum equity requirement at all time of $25,000 - There is a big difference between a balance requirement of $25,000 and a minimum equity requirement.

4-NO, see above you need $25,000 in equity at all times- Not all assets are marginable.

Equity is the same as Margin
Equity = market value of you stock plus you credit balance (or minus your debit balance.
A pattern trader must have $25,000 minimum equity at all times

As mentioned above, there's no way you are ready to be a trader,let alone a pattern trader - Learn the terms and rules before you do your next trade or you will hurt yourself for sure