You should consider the following points before engaging in a day-trading strategy.
For purpose of this notice, a “day-trading strategy” means an overall trading strategy characterized by the regular transmission by a customer of intra-day orders to effect both purchase and sale transactions in the same security or securities.
Day trading can be extremely risky. Day trading generally is not appropriate for someone of limited resources and limited investment or trading experience and low risk tolerance. You should be prepared to lose all of the funds that you use for day trading. In particular, you should not fund day-trading activities with retirement savings, student loans, second mortgages, emergency funds, funds set aside for purposes such as education or home ownership, or funds required to meet your living expenses. Further, certain evidence indicates that an investment of less than $50,000 will significantly impair the ability of a day trader to make a profit. Of course, an investment of $50,000 or more will in no way guarantee success.
Be cautious of claims of large profits from day trading. You should be wary of advertisements or other statements that emphasize the potential for large profits in day trading. Day trading can also lead to large and immediate financial losses.
Day trading requires in-depth knowledge of the securities markets and trading techniques and strategies. In attempting to profit through day trading, you must compete with professional licensed traders employed by securities firms. You should have appropriate experience before engaging in day trading.
Day trading requires knowledge of a firm’s operations. You should be familiar with a securities firm’s business practices, including the operation of the firm’s order execution systems and procedures. Under certain market conditions, you may find it difficult or impossible to liquidate a position quickly at a reasonable price. This can occur, for example, when the market for a stock suddenly drops, or if trading is halted due to recent news events or unusual trading activity. The more volatile a stock is, the greater the likelihood that problems may be encountered in executing a transaction. In addition to normal market risks, you may experience losses due to systems failures.
Day trading will generate substantial commissions, even if the per trade cost is low. Day trading involves aggressive trading, and generally you will pay commissions on each trade. The total daily commissions that you pay on your trades will add to your losses or significantly reduce your earnings. For instance, assuming that a trade costs $16 and an average of 29 transactions are conducted per day, an investor would need to generate an annual profit of $111,360 just to cover commission expenses.
Day trading on margin or short selling may result in losses beyond your initial investment. When you day trade with funds borrowed from a firm or someone else, you can lose more than the funds you originally placed at risk. A decline in the value of the securities that are purchased may require you to provide additional funds to the firm to avoid the forced sale of those securities or other securities in your account. Short selling as part of your day-trading strategy also may lead to extraordinary losses, because you may have to purchase a stock at a very high price in order to cover a short position.
Potential Registration Requirements. Persons providing investment advice for others or managing securities accounts for others may need to register as either an ” Investment Advisor” under the Investment Advisors Act of 1940 or as a “Broker” or “Dealer” under the Securities Exchange Act of 1934. Such activities may also trigger state registration requirements.
Your brokerage firm is furnishing this document to you to provide some basic facts about purchasing securities on margin, and to alert you to the risks involved with trading securities in a margin account. Before trading stocks in a margin account, you should carefully review the margin agreement provided by your firm. Consult your firm regarding any questions or concerns you may have with your margin accounts. When you purchase securities, you may pay for the securities in full or you may borrow part of the purchase price from your brokerage firm. If you choose to borrow funds from your firm, you will open a margin account with the firm. The securities purchased are the firm’s collateral for the loan to you. If the securities in your account decline in value, so does the value, so does the value of the collateral supporting your loan, and as a result, the firm can take action, such as issue a margin call and/or sell securities or other assets in any of your accounts held with the member, in order to maintain the required equity in the account. It is important that you fully understand the risks involved in trading securities on margin. These risks include the following:
You can lose more funds than you deposit in the margin account.
A decline in the value of securities that are purchased on margin may require you to provide additional funds to the firm that has made the loan to avoid the forced sale of those securities or other securities or assets in your account(s).
The firm can force the sale of securities or other assets in your account(s).
If the equity in your account falls below the maintenance margin requirements or the firm’s higher “house” requirements, the firm can sell the securities or other assets in any of your accounts held at the firm to cover the margin deficiency. You also will be responsible for any short fall in the account after such a trade.
The firm can sell your securities or other assets without contacting you.
Some investors mistakenly believe that a firm must contact them for a margin call to be valid, and that the firm cannot liquidate securities or other assets in their accounts to meet the call unless the firm has contacted them first. This is not the case. Most firms will attempt to notify their customers of margin calls, but they are not required to do so. However, even if a firm has contacted a customer and provided a specific date by which the customer can meet a margin call, the firm can still take necessary steps to protect its financial interests, including immediately selling the securities without notice to the customer.
You are not entitled to choose which securities or other assets in your account(s) are liquidated or sold to meet a margin call.
Because the securities are collateral for the margin loan, the firm has the right to decide which security to sell in order to protect its interests.
The firm can increase its “house” maintenance margin requirements at any time and is not required to provide you advance written notice.
These changes in firm policy often take effect immediately and may result in the issuance of a maintenance margin call. Your failure to satisfy the call may cause the member to liquidate or sell securities in your account(s).
You are not entitled to an extension of time for a margin call.
While an extension of time to meet margin requirements may be available to customers under certain conditions, a customer does not have a right to the extension.
Please note that use of our website is subject to your acceptance of the following terms and conditions. Processing further into this site indicates that you have read and agree to the following terms and conditions of use.
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Swiss America Securities, Ltd (SureTrader) does not accept accounts for U.S. Persons that have been solicited directly or indirectly in compliance with SEC Rule 15a-6.
Clients must be familiar with the following responisibilities and must agree to follow all Regulatory and Exchange rules:
It is always the clients responsibility to review their account daily, through our back office website http://www.iboss.suretrader.com and compare the information shown there versus the information displayed on the trading software. If there is any discrepancy of any kind, including but not limited to; current equity, buying power, or positions the client must contact Swiss America Securities prior to acting on any information that does not match. Also if you ever believe for any reason that anything is incorrect in your account, please make sure you always contact us before acting. If a client acts before contacting us to verify the validity of their account information or fails to review their account on a daily basis, any issues that arise as a result of not reviewing their information or contacting our firm in a timely manner will be solely the clients responsibility.
It is also the clients responsibility to review all their open orders daily, especially if you are placing GTC (good till cancelled) orders. If you believe you had an order that for some reason is not showing on your software or have any other issue or problem with any order, you will need to contact us immediately. You will be responsible for this daily review of your open orders. Any issues caused by the failure to do this review and to contact us in a timely manner to resolve any discrepancies will be solely the clients responsibility. Also, please note that you alone are responsible for any orders you place in your account and the resulting executions from those orders.
STOCK SPLITS & SYMBOL CHANGES & OPTIONS
It is the clients responsibility to notify Swiss America Securities if they hold any stock that has either a forward or reverse stock split and/or if any stock they own has a symbol change of any kind. The client will also need to contact us if you are holding an option that has expired, been exercised, assigned or changes symbols. The trading software will NOT automatically adjust for these changes. The client will need to contact us and we will manually adjust their trading software to reflect these changes.
The term ‘short sale’ means any sale of a security, which the seller does not own, or any sale, which is consummated by the delivery of a security, borrowed by, or for the account of the seller. For stocks hard to borrow, short sales must be preceded by a request to Swiss America Securities to make sure stocks can be borrowed. We will then contact the Stock Loan Department to ensure the availability of the stock. If approval is granted by the Stock Loan Department, Swiss America Securities will inform you that the stock can be sold short. If approval is not received, the security in question cannot be shorted. If you short a stock that has not been located, the transaction may be cancelled and you will be responsible for any losses incurred. Short sales made on stocks not located will result in a buy-in. All trades that violate these rules will be put into Swiss America Securities error account. All losses will be charged back to your account. You will not receive any profit from these trades as they are illegally gained. Repeated violations of these rules can result in your account being closed. Assuming the security in question can be shorted, the short sale must take place as ‘sell short’. If the trader uses a sell to place a short sale or over-sells a position, it is possible that the trade will be executed illegally. This is a violation of SEC rules. The trader is responsible to cover any illegal position immediately with a corresponding buy. You will be responsible for any losses from invalid short sales and any invalid gains from these trades are illegal and will be removed. These issues must be reported via e-mail to Swiss America Securities by the end of the trading day.
There are 2 types of margin available – Overnight (2:1) and Day Trading (6:1). Overnight buying power is limited to two times the available equity at the end of the preceding day. Overnight positions held above two times equity will result in a federal margin call. You may have up to 3 business days to cover an overnight call by either sending in new funds for the amount of the call or liquidating positions to meet the call. If you liquidate positions to meet this call, your account may be restricted or closed. If you do not cover the amount of the call when due, Swiss America Securities will liquidate your position.
Day Trading buying power is applied to stocks that you day trade (buy and sell in the same day). For margin accounts with equity above $500, the margin is set at 6:1 and there is no limit on the number of day trades that can be made. Note that overnight positions still must not exceed 2:1 margin.
Buying power figures are set at the beginning of the day and generally will not be increased for the remainder of the day (covering overnight positions may not increase these numbers). When you have overnight positions your available buying power will generally be computed as follows: 30% of short positions and 25% of long positions, minus both figures from your equity and double what is left over. These percentages may be subject to change or differ by stock.
There are also increased margin requirements when shorting low priced stocks. The minimum requirement is $2.50 per share on shorts, so if you short a stock trading under $2.50 a share you still will be held to the increased requirement of $2.50 per share. Stocks trading between $2.50 and $5 will be held to 100% requirement on shorts. Stocks above $5 per share will be held to a minimum requirement of $5 per share and then the regular short requirements thereafter.
Swiss America Securities, Inc. will generally attempt to contact you about any margin calls you may receive. This notice may be done by e-mail, phone or by other means pertaining to the details of your margin call. Clients must strictly adhered to all margin rules. Please be aware that Swiss America Securities is in no way obligated to inform you of your margin calls. It is your responsibility to monitor your own account at all times.
Overnight Buy Power Release: When you cover a position you had held overnight, we can allow the DAS Trader software to give you a release of buy power. This release will show up in both your intraday and overnight buy power numbers on the software. The reason for this is because the overnight buy power amount shown in the software is only informational. It does not actually limit you to only trading that amount because the software does not know how long you will hold a position when you open it. The release that goes into your intraday buy power CANNOT be used for intraday trading (day trading). If you do any intraday trades (day trades), they can only be done using the initial intraday buy power you had before you covered the overnight position and got an additional release. You cannot use the newly released funds for new day trades. It can ONLY be used for taking new overnight positions. If you do use the released funds for new intraday trades (day trades) then you will get a day trading (DT) margin call. That type of DT call can ONLY be met by depositing new funds. If you get a DT call and do not deposit funds to meet that call, your account would be closed.
The amount of equity required to open and maintain a day-trading account is $500. If your equity drops below this amount you must deposit additional funds to get your equity back up to $500.
The routing fees on the website and as set in the software are subject to change at anytime. You are responsible to know the correct fee for any route you are trading through. If necessary, we reserve the right to charge or adjust for venue, routing, or exchange fees.
System response, trade executions and account access may be affected by market conditions, system performance, quote delays and other factors. The risk of loss in electronic trading can be substantial. You should therefore consider whether such trading is suitable for you in light of your financial resources and circumstances. We can not and will not be held responsible for losses resulting from issues with the use of third party software quoting systems or third party order execution routing issues. We only provide our clients with the ability to connect to quoting software and order execution routes, we do not own or control them.
The procedures and rules listed on this page are for informational purposes and may be subject to change, which may not be reflected on this page, or may be updated without notice. This is only a partial list of trader’s responsibilities. Traders need to understand that they have far more responsibilities than are or can be listed here. If you have any questions about any of your responsibilities, please contact us.