Margin account confusion: Reg. T call for what reason?

Discussion in 'Learn how to trade or invest by asking questions' started by Kirufu, May 28, 2009.

  1. Kirufu

    Kirufu New Member

    I've been experimenting with stocks for the first time--opened up an Ameritrade account for the 500 free trades in the first month.

    I saw here and there that you can trade with unsettled funds if you activate Margin trading, so I did. I've got around $2,000 in my account--and made sure not to use any margin funds, just my own equity.

    But it looks like the "maintenance requirement" still applies if you trade with a margin account.. even if I'm NOT exceeding the actual account value, as I got a Regulation T call. I sold the stock I had (for a profit), and it resolved itself the next day. But doesn't this seem strange, if I only had $2,000 of stock in a Margin account with a Buying Power of significantly more? I held the stock overnight, but considering it was within my actual cash value.. shouldn't I be able to?

    I thought I'd read everything I needed to start--but apparently not. If any of you wizards could help me see the light, I'd appreciate it. Thanks!
     
  2. Kirufu

    Kirufu New Member

    Update: Ameritrade responded to my letter with the following, which seems to make sense, but.. On my new trades today, it still lists a "maintenance requirement" despite that I'm trading with less than the amount of my own cash in the account.

    As in.. the account has $2,070 equity in it but I only own $1,350 of stock at the moment. But it lists "Maintenance requirement: 399.15."

    Why do I have a maintenance requirement at all, if I'm not using margin funds?

    Still confused.. Bleh.


     
  3. yoyomama

    yoyomama Member penny contest winner

    I will say this...when I converted my Scotttrade Account to a Margin Account...it took a couple of days to straighten out. I received a few hefty maintenance calls for a couple of days even though I was using my own funds... but it's their system they told me. It got straight in a few days.
     
  4. Technical Alchemist

    Technical Alchemist forum leader won penny contest 13x won weekly contest 12x

    Just curious, what's the house maintenance requirement for Ameritrade?
     
  5. Kirufu

    Kirufu New Member

    Thanks for the replies, everyone. Ameritrade basically said it was a mistake on their part, and it hasn't happened since.

    For a long stock position valued at $4.01 per share or more, the margin requirement is 30%. However, some stocks have special maintenance requirements, which means a different value will be used instead of 30%.

    For a long stock position valued between $2.00 and $4.00, the margin requirement is $2.00 per share. However, some stocks have special maintenance requirements, which means a different value will be used instead of $2.00.

    For a long stock position valued at less than $1.99 or less per share, the margin requirement is 100% of the current market value of the stock.

    For a short position on a marginable stock valued from $5.01 to $16.67 per share, the maintenance requirement of $5 per share applies. A maintenance requirement of 100% is needed for all short stocks trading from $2.50 to $5.00 per share. A maintenance requirement of $2.50 per share is needed for all short stocks trading below $2.50 per share.

    Concentrated positions and certain stocks have special requirements between 35% and 100%.
     
  6. Technical Alchemist

    Technical Alchemist forum leader won penny contest 13x won weekly contest 12x

    Cool. Just curious. 30% tends to be the standard house requirment. For whatever reason my broker has a higher requirement.
     

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