![]() ![]() ![]() So why miss out on another opportunity because of restrictions? Make a move into futures. ConclusionĪs a futures trader, you can express your opinion long or short multiple times a day or week and you do not have to worry about day trading restrictions applicable to equities or the ability to take a short position in the market. But futures trader can be short the market just as easily as being long. This means in a down-trending market, an equity trader may never get to take a short position, thus losing out on a market opportunity. When a trader shorts a stock, they are required to sell at a minimum of a tick above last traded price. You can take a short position as easily as a long position. In comparison, a futures trader does not have the same short sale restrictions. And there are many reasons why shares may not be available. No Short Sale RestrictionsĪnother common struggle for equity day traders is that in order to short a security, there must be shares available to trade. Day trading is essentially a play on the short-term volatility (or price movement) of a stock on any given day. With futures, that same margin may afford you the ability to trade a much larger notional value. Exceed this amount and margin calls may further limit buying power and trading frequency. So if they have $30,000 maintenance excess available, they can only trade up to a value of $120,000. MarginĪn equity trader can only trade up to four times their maintenance margin excess on an intra-day basis. In fact, as long as you maintain the minimum margin requirements for your positions, you can trade as frequently as you like at a size suitable to your trading needs. Minimum Account SizeĪ pattern day trader who executes four or more round turns in a single security within a week is required to maintain a minimum equity of $25,000 in their brokerage account.īut a futures trader is not required to meet this minimum account size. Missed opportunities can be costly, so we will look at some of the restrictions in the United States for day trading cash equity products and compare that to day trading with futures. As an equity trader, have you ever been locked out of trading due to a day trading violation? Or have you missed an opportunity due to short selling restrictions? ![]()
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