It all depends on your broker. Usually, they will let you borrow 100% of whatever you have in your cash account. You have 50k cash, you have 100k margin power in your account.

If you have 100k, you have 200K. You take all profit. For example, you have a 10k cash balance, 20k on marhin, you trade on margin, and buy 1000 shares of x company that is trading at 20.00. X company jumps to 22.00 per share, you sell, your broker gets their money back (depending on how long you had borrowed it, with interest,) you made 2k in profit, so now you have 12k in your account. So, you have 24k in margin buying power.

Its not a free ride unless you make the purchase on cash.

Daytrading is fun, you should do it sometime :smxA:.

 

The regular margin buying power is based on the previous day's closing prices and is reduced by any open orders. The value is reduced or increased as soon as the trade executes, not when the trade settles.

 

If he is a "pattern day trader" he can trade on margin with 4 times the money in his account. Basically have to complete 4 trades in 5 days. (Buy and sell a position.)

Btw, I made a killing on AAPL call options in the last two days. Bought at 3pm yesterday and sold right before close today. A 51% gain in less than 25 hrs.:icon_super:

 

If your account has more than 25000, you don't come under PDT right?Unless of course you choose to.

 

Nice.

I shorted Apple at $140 (called it.) I'm riding it down....

My hatred for Steven Jobs helped a lot :cheers:

 

You need 25K plus to qualify as a day trader. And, of course, the balance needs to be maintained. Under 25k you are just a regular Joe.

 

Yepp, I checked it again and you are right. Under 25K, and you get into PDT, you can't trade.

http://www.itsinthecharts.com/PDTreport/NewRules.htm#Pattern Day Trader

 

TGB, we have spoken a while back. :smxF: