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I agree with Linda wholeheartedly.
Also, please realize that the proposal by the old boys network at NYSE and NASD is about the minimum equity you can have in your account before you can utilize margin borrowing. It has nothing to do with the leverage. Actually, these boys are also proposing to RAISE the margin leverage to 4 to 1 from the current 2 to 1 for the daytraders!!! What is that gonna do to the volatility I ask you!!!
That is why this rule does not make any sense at all. If I have 2K in my account, I buy maybe 100 shares with or without margin. If I have 25K in my account, I buy 1000 shares. If my account gets wiped out, I lose 2K in the first case, 25K in the second. How is this gonna protect me? How is this gonna help the small investor, the novice, the market? Are we saying that people with 25K in their accounts are more knowledgeable, or able to withstand the loss of that 25K more than somebody with only 2K and testing the waters, or that is how much he/she chose to invest? And how about people like me who have numerous accounts with different brokers, where my capital is divvied up. Then I'll have to tie up 25K per brokerage account just to be able to have a margin account?And why single out the "daytraders" only? Daytrading, if done properly, is the SAFEST way to trade. I used to position trade for years. But when I became a full time trader, I had to switch to daytrading because the risk is much LESS. The people who get the margin calls are the ones that hold a position indefinitely, taking all that overnight risk, or don't honor their stop loss and let their trades turn into "investments".
The brokers are already taking care of the "small investor" by raising the margin requirements for volatile stocks at their will. Almost all those hot & crazy internet stocks have margin requirements upto 100% at various different online brokers.
This totally absurd and ridiculous rule will do nothing good, will serve no useful purpose, but deny opportunity for a lot of responsible, successful traders.
Keep sending your protests to SEC, remember the deadline is Feb. 3 for all public comment. SEC is good, SEC is our friend, it is the old boys at NYSE & NASD who, after fleecing the public and robbing them blind for all these years, are now desperate, they don't know what hit them and they are running around like chickens without heads :-))
Best regards, and happy trading,
Levent
-----Original Message-----
From: Linda Swope [SMTP:lswope@xxxxxxxxxxx]
Sent: Tuesday, February 01, 2000 1:36 PM
To: realtraders@xxxxxxxxxxxxxxx
Subject: [RT] Re: SEC New Margin Rule Proposal
Actually, this trader does remember 1987 and the money she lost on Black
Monday. But life is a journey and not a destination. A thousand tiny
steps, Black Mondays and Blue Mondays included, lead us to where we stand
today. Every time we stumble, we stand up straighter, smarter and faster.
The NYSE doesn't have the right to regulate our paths because we have $1
less than the next stumbling trader.
And so must something be done about the people who take out personal loans
to start their own businesses? Would you have "done something about" me
when I was 22 and put every penny I could get my hands on into a photography
business that had a high probability of failure? Thank goodness you didn't.
I'd hate to have missed all those smiling faces!
Linda
Swope's Mountain Photography
http://www.swopephoto.com
linda@xxxxxxxxxxxxxx
Climb the mountains & get their glad tidings: Peace will flow into you as
sunshine into flower; the winds will blow their freshness into you & storms
their energy, & cares will drop off you like autumn leaves. John Muir 1838 -
1914
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