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What is a day trade call?

Under FINRA’s rules, there are limits on how much funds a customer can use for day trading - even if your account holds more than US$25,000 at the market close of the previous trading day. This limit is known as your Day Trade Buying Power (DTBP). If you place day trades that exceed this limit, a Day Trade Call – sometimes referred to as a margin call – will be issued. 

You’ll be notified via email and will need to deposit funds to restore the ability to day trade. 

There are three different scenarios to consider when calculating your Day Trade Buying Power:

 

1 - Account with over US$25,000 and no open Day Trade Calls:

• Day trade Buying power = 4 x ​Exchange margin excess (calculations below)
  
• You can place multiple day trades using your full DTBP.
• A new trade can only be placed after the previous one is fully closed, and each trade must not exceed your buying power.
• As long as each trade stays within this limit, no Day Trade Call is triggered.

 For example, let's say you have US$28,000 as buying power.

 Then, you can buy stock $ABC for less than US$28,000 and sell it. 

 Once this day trade is closed, you can buy stock $ABC or another stock for less than US$28,000 and sell it.

In short, no day trade call will be triggered as long as you are closing the previous day trades before opening a new one and also don’t exceed your Day Trade Buying Power.

 

2 -  Account with over US$25,000 and an open Day Trade Call:

• Day trade Buying power = 2 x ​Exchange margin excess (calculations below), BUT, if you have a day trade call that has come due and not met, the buying power is reduced to 1 x Exchange margin excess
  
• If you already have an outstanding Day Trade Call, your trades are calculated aggregately.
• This means the total value of all day trade buy orders on a given day must not exceed your day trade buying power.

For example, let's say you have US$28,000 as buying power.

 If you day trade three times in the same day and the sum of all the buys add up to US$28,000 or less, no day trade call will be generated.

 If all the buys add up to an amount greater than US$28,000, then a day trade call is issued.

 

3 - Account with less than US$25,000 at the previous market close

•  Your Day Trade Buying Power is restricted. Exceeding it will trigger a Day Trade call based on your largest day trade
• The value of the call is a percentage of that trade:
  • Standard securities: 25%
  • 2x leveraged ETFs: 50%
  • 3x leveraged ETFs: 75%

 For example, the sum of the buying orders was US$10,000.

 Then, 25% of this value is the day trade call: US$2,500 - the value of the call you received.

 This can change for leveraged ETFs;  2x ETFs have a 50% requirement and 3x ETFs have a 75% requirement.

If you have been designated with a Day Trade Call and don’t believe you fit into one of the above categories, please get in touch with our support team here. 

 

What happens if you exceed this limit?  

If you trigger a Day Trade Call, Stake will notify you via email. You’ll have four business days to meet the call by depositing funds into your Wall St account. 

While the call is open:

• Your Day Trade Buying Power is reduced to 2x your exchange margin excess
• If the call is not met within the deadline, this is further reduced to your exchange margin excess.
      

How to calculate your margin excess: 

Exchange Requirement =    Market value (stocks)   x     25%

 

Exchange Margin Excess  =    Equity (stocks + cash)  -  Exchange requirement

If a customer has an outstanding  Day Trade Call and receives a second, their account will be restricted from placing any day trades for 90 days, or until both calls are fully met, whichever comes first.     

This restriction only applies to day trading activity. You’ll still be able to place non-day trades, such as buying and holding positions overnight.     

 

I have multiple Day Trade Calls, how much do I need to deposit?

If you receive more than one Day Trade Call before resolving the first, you’ll need to deposit funds into your Wall St account equal to the highest outstanding call

For example, if you receive a US$1,000 Day Trade Call and then a second for US$1,500 before closing the first, you’ll need to deposit US$1,500 into your Stake Wall St account. 

 

Some things to consider:    

Day Trade Calls and Pattern Day Trader (PDT) restrictions are separate regulatory measures, but both are relevant to anyone engaging in day trading. These rules are imposed by FINRA and our U.S. broker-dealer DriveWealth, not by Stake. 

Margin requirements are based on the risk exposure created by your trading activity, not just end-of-day holdings. So, even if you close all positions before market close, intraday trading can still create financial risk. 

DriveWealth may set equity requirements above the regulatory minimums, and cross-guarantees between accounts cannot be used to meet day trading margin obligations. 

For more information, please access the FINRA website or contact us here.

 

Disclaimer

Stake, trading as Stakeshop Pty Ltd, is not obligated to provide advance notice or guidance regarding day trading activity. Customers who engage in day trading are responsible for understanding and complying with all applicable regulations and tax obligations.