Daytrading: Minimum amount question?

Question

Why is it that to daytrade equities, you need to have $25,000 minimum in your account? But if you were to daytrade foreign currencies, the minimum is about $300? Why the huge difference?

Answer 1

Trading stocks in the US is regulated by the SEC (securities exchange commission)  They are responsible for the $25,000 minimum account balance.  You can still daytrade with less.  But you can't do it for more than 3 days out of a 5 day period otherwise you will have to sell all of your holdings and may not be able to buy any US securities for 90 days.

Answer 2

Hello,

The minimum account of any type of trading varies from broker to broker. My broker FINEXO allows forex as well as stock trading at mini of $100 and the leverage is 200:1. While i have seen some brokers charging very high.

I think this difference is in terms of risk, liquidity, leverage and broker's market stability. As soon as the broker get itself competitive enough it relaxes on various facilities. And change it accordingly.

Answer 3

The minimum amount taken in any field(equity, commodity, derivative, forex and others) vary from brokerage firms to others.........u will not find each and every broking firm demanding the same amount, some will ask u a higher and on the other hand some one will ask u for a nominal margin......

The difference also happens due to the risk involved and market volatility, liquidity and market capitalisation............

the huge diff also proves the huge risk envolved.......

Answer 4

Because of the risks involved.

Day trading is no place for someone to learn about stock trading.  The overwhelming number of people who start this way, get cleaned out.

Forex is completely different.  You can't go negative, like you can in a margin account because the dealer will close you out when your losses take you down to zero.