E trade account requirements
You should contact your firm if you have decided to reduce or cease your day trading activities to discuss the appropriate coding of your account. This collateral could be sold out if the securities declined substantially in value and were subject to a margin call.
The typical day trader, however, is flat at the end of the day i. Therefore, there is no collateral for the brokerage firm to sell out to meet margin requirements and collateral must be obtained by other means. Accordingly, the higher minimum equity requirement for day trading provides the brokerage firm a cushion to meet any deficiencies in the account resulting from day trading. The credit arrangements for day-trading margin accounts involve two parties -- the brokerage firm processing the trades and the customer.
The brokerage firm is the lender and the customer is the borrower. No, you can't use a cross-guarantee to meet any of the day-trading margin requirements. Each day-trading account is required to meet the minimum equity requirement independently, using only the financial resources available in the account.
What happens if the equity in my account falls below the minimum equity requirement? I'm always flat at the end of the day. Why do I have to fund my account at all? Why can't I just trade stocks, have the brokerage firm mail me a check for my profits or, if I lose money, I'll mail the firm a check for my losses?
It is saying you should be able to trade solely on the firm's money without putting up any of your own funds. This type of activity is prohibited, as it would put your firm and indeed the U. The money must be in the brokerage account because that is where the trading and risk is occurring.
These funds are required to support the risks associated with day-trading activities. You can trade up to four times your maintenance margin excess as of the close of business of the previous day. You should contact your brokerage firm to obtain more information on whether it imposes more stringent margin requirements. If you exceed your day-trading buying power limitations, your brokerage firm will issue a day-trading margin call to you.
Until the margin call is met, your day-trading account will be restricted to day-trading buying power of only two times maintenance margin excess based on your daily total trading commitment.
Day trading in a cash account is generally prohibited. Day trades can occur in a cash account only to the extent the trades do not violate the free-riding prohibition of Federal Reserve Board's Regulation T. In general, failing to pay for a security before you sell the security in a cash account violates the free-riding prohibition.
If you free-ride, your broker is required to place a day freeze on the account. No, the rule applies to all day trades, whether you use leverage margin or not. For example, many options contracts require that you pay for the option in full. As such, there is no leverage used to purchase the options. Nonetheless, if you engage in numerous options transactions during the day you are still subject to intra-day risk. You may not be able to realize the profit on the transaction that you had hoped for and may indeed incur substantial loss due to a pattern of day-trading options.
Again, the day-trading margin rule is designed to require that funds be in the account where the trading and risk is occurring. Can I withdraw funds that I use to meet the minimum equity requirement or day-trading margin call immediately after they are deposited?
No, any funds used to meet the day-trading minimum equity requirement or to meet any day-trading margin calls must remain in your account for two business days following the close of business on any day when the deposit is required. Frequently Asked Questions Why the change? Were investors given an opportunity to comment on the rules? Quantopian is here to democratize finance. Adding a new brokerage is one way of doing that.
Grant, Over the last few month I also have been wondering about the divergent goals the Q has stated. Seong seems to thing Quantopian's original goals of democratizing Wall Street are still in place. I very much doubt that. There's no money in it as has been noted on various threads. In fact, as you point out, the expansion of broker offerings is actually counter productive. Maybe you recall the movie Mercury Rising as well as the recent The Imitation Game where cryptographers created intensely difficult puzzles looking to filter in only those people smart enough to prove their intellectual mettle.
The mathematically challenged need-not-apply. That philosophy would seem to tie in well with Quantopian's more recent goal settings; cultivate the best algorithms from the smartest yet undiscovered quants and become wealthy leveraging said algos as a hedge fund. If it works maybe somebody will even make a movie about them No doubt the research platform will assist those targeted quants.
That's a worthy and necessary addition in support of the fund. And of course the Open contributes to the algorithm-trust. But adding cheap brokers? Additional help docs or how-tos or simplified tool expansion to assist the uninitiated?
Raise the entry bar up where the noobs give up sooner and don't waste the fund's time or resources. Nix all this OWS claptrap. The VC and people with bank don't want to hear about Quantopian supporting the little guys, the simple traders?
Seong, are you sure you're working for the company you think you are? This is Wall Street after all. Well, opening up to alternate brokers is a means of advertising, thereby pulling in other prospective Q fund managers. Also, in the context of the fund, having only one trading venue IB might not be the best practice. It doesn't seem like this is an equal partnership, yet. I don't see Quantopian mentioned on https: And I don't see any press release or even a peep out of E-Trade on the web.
I did see a couple E-Trade guys at QuantCon by their name badges , but they kept a low profile e. I'm also wondering how fractional shares are treated. Say I have a portfolio of 20 stocks. So, unless fractional shares are supported, the share prices need to be pretty low. No time now to sort it out, but I do see that E-Trade has https: Also, which ETFs are available? The other thing that is not clear is if I port my hypothetical precious strategy over to Quantopian, from E-Trade or elsewhere , what will Q be able to access?
There is a legal? Or is there truly a separate business from the Q Fund, through which users can just trade without participating in the fund in any way i. A bit of a mind-bender Of course, one of our goals is to make money for ourselves, our investors, and the people who will eventually invest money in our fund.
But our goal is also to democratize Wall Street. These two goals are symbiotic, not conflicting. The easier we make it for people to engage in quantitative investing, the more people we will enable to do so. The more people we enable to do algo trading, the more effective our strategy will be of using "crowdsourcing" to find good algos for the fund. The size of our pool of potential algo authors is a key component of our pitch to potential investors in our fund.
It is entirely to our advantage to continue to do whatever it takes to grow that pool, and that means continuing to improve the site, not just for people whose algos are managing money in our fund, but for anyone who wants to try their hand at algo trading. There are already more than enough barriers to entry in this field.
That's the strategy that the existing funds and banks are using, the strategy that makes it hard for people to become algo traders. Our approach is entirely different and will remain that way.
I think it is important for people to have as easy a path to trading live as possible. For many people, myself included, seeing their algo actually place trades to their account is a huge rush. Automating anything is a bit of a thrill for me, but investing is uniquely exciting.
I just imagine all the people in the world trading in the same exchanges, and my bot is out there competing. IB is great on costs because they have a higher account minimum. I think more people will be able to try trading real money with more brokers. I wonder what the expense ratios, etc. In other words, are there internal expenses of the ETFs that make them less attractive? Would E-Trade provide you with data on how profitable their users are, particularly at the low end of the capital spectrum?
Of course, the cool thing about Quantopian is that anyone can do their own due diligence, before they jump in Part of the traditional "Wall Street" business is to get folks to pay excessive fees with the idea that they'll be able to beat the market with "secret sauce"active management and of course, there is the gamblers rush and addiction problem, as well. It just doesn't leap out that you are doing the world a favor here, but rather might be trodding a well-worn path.
We'll see if it makes sense. I can ask them if they have profitability data on accounts. Since they are a public company, if that data isn't in their quarterly updates, I very much doubt they will disclose it at all. The regulatory body for forex is the CFTC, and they started requiring forex brokers to report "profitability statistic".
Forex also has extremely low balance requirements and very high leverage. With Quantopian, you can set the commission model and check what you'll be paying, and decide if the strategy can overcome the transaction costs.
However, I also think it is good to start with a tiny balance just to be sure everything is working as you expect in a live environment. No commission is the best commission: Be sure to look at the underlying ETF fees, there is usually an annual percentage fee that you'll be paying inside the ETF. Do you have a link to the no commission ETF list? So, I'm thinking that if someone does their homework, and wants to give Quantopian a try, a simple use case would be to do a monthly or quarterly re-balancing of a basket of the commission-free ETFs offered by E-Trade rather than the ones Seong posted above, which would get slapped with ridiculous commissions.
It would fit under your product category of "algorithmic investing" if, in fact, you still have it in your business plan. I think that's a great idea. Will be updating this thread shortly with a sample basket of commission-free etfs when from that list https: One consideration mentioned in http: Thanks for checking up.
We're working on getting ourselves ready for beta full-steam: Once we have a date in mind, I'll be sending an email out to our waitlist attendees. Thanks for being patient all! If you don't have this, your stopped from trading. Regardless, incorporating E Trade is awesome. Right now, the only real platform to trade with Python with is IB. To bring in E Trade really puts Quantopian in a nice niche. Just checking back to see how this is coming along. Does it have legs, or is it dead in the water?
We've found this work to be taking longer than expected as we tend to be careful with these sorts of things. We're going through a new planning cycle for expanding our brokerage integrations.
It's made for much slower progress than we expected earlier this year.