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> I wanted to try day trading myself but they changed the law in 2001 so you had to have $25,000 to trade on margin, so only the wealthy could get twice the gai

> I wanted to try day trading myself but they changed the law in 2001 so you had to have $25,000 to trade on margin, so only the wealthy could get twice the gains: https://en.wikipedia.org/wiki/Pattern_day_trader https://en.wikipedia.org/wiki/Pattern_day_trader This is how the rich get richer and the poor get poorer. The rich can trade on margin, pay less tax (capital gain tax is lower than even income tax), and have many more other opportunities. The middle class is shrinking for a reason.

xapata 9y ago
You're speaking of long term capital gains. Day trading results in short term gains which are taxed at regular income rates. Margin accounts are also generally foolish; a way to lose money. They are not usually at favorable rates.
- nullnilvoid 9y ago
  The rate for margin is yearly 8% for my brokerage account. The NASDAQ has gone up 15% since Trump got elected. If you use it wisely, it is great leverage. The poor don't even get to use it. They are completely shut out of the opportunity.
  - xapata 9y ago
    How much leverage do you think a poor person should take for speculating in the stock market? 15% annual return on nothing is still nothing. For most poor, doubling salary would have dramatically more impact than doubling their savings account.
    - nullnilvoid 9y ago
      > 15% annual return on nothing is still nothing. This says how disconnected you are from the reality. Many Americans don't even make $100 a day. $10,000 investment plus $10,000 margin multiplied by 15% is significant for many people to buy food and pay rent.
      - xapata 9y ago
        Oh boy. Your criticism is that I overestimate wages and your counter-example is a $10,000 investment? "Nearly half of Americans would have trouble finding $400 to pay for an emergency" (https://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/ https://www.theatlantic.com/magazine/archive/2016/05/my-secr...). How are these sub-$100 per day folks going to scrape together $10,000 for investing?
        nullnilvoid 9y ago
        Anywhere below $25,000 does not get the opportunity to use the margin. $10,000 is still far from hoop. $100 per day will get you $2,500 per month conservatively. For a few months of tight pants, you will be able to save enough for $10,00-. You are missing the point here. It is about the principle. Everybody is created equal and should get equal opportunities (at least in terms of law).
        xapata 9y ago
        I agree with the principle of equal opportunity, but I disagree with the implementation. Providing the "opportunity" to buy stocks on margin to people with less than $25k in their accounts is more like selling cigarettes than selling education. Just today I noticed a sign posted in the window of my corner store, "Customers of [convenience] store won $1,490,823 from [state] lottery in 2016!" I wish it were required to post the total paid as well. It'd be much better for the public if the sign read, "People in your neighborhood paid $3 million to the state lottery and only won $1 million back." Similarly, if the brokerage is going to offer margin accounts, they should post easy to understand statistics on how much customers earn and spend. A nice histogram showing returns with sliders to select a bucket for initial amounts invested and proportion bought on margin. Enforcing free information access is another way that governments can help provide equal opportunity.
nradov 9y ago
This is ridiculous. Poor people aren't going to get rich by day trading on 2x margin. And if someone in the US seriously wants to get into margin trading it's not that tough to scrape together $25k by getting a second job and living frugally for a couple years. Also if you have decent credit you can simply take out an unsecured personal loan for $25k and deposit that in your trading account. This is effectively the same thing as trading on margin.
- nullnilvoid 9y ago
  Why do the poor have to get a second job in order to get 2x margin? Why do they have to jump through the hoop when the rich don't have to? If the poor have $2,000, why cannot they use margin as leverage? The opportunities are not equal there.
  - nradov 9y ago
    Why is life not perfectly fair for everyone? If the margin trading limit was lower then the news would be full of sob stories about how greedy brokerages let unsophisticated people get in over their heads and then took their life's savings on a margin call. Sometimes stocks go down.
    - nullnilvoid 9y ago
      It is not fair for everyone. But this is an artificial, unneeded hoop that could be easily removed. If we set it at $25,000, does that prevent "unsophisticated people take their life's savings on a margin call"?
nl 9y ago
The alternative reading of that is that the rich can afford to lose more. I'd note that the OP lost all their gains and ended up breaking even - and that was with their father stopping them shorting. If they had been short they could easily have been ruined. Asking people to have a $25K buffer before they start gambling isn't entirely an unjustifiable idea.
mortehu 9y ago
The poor can buy SPLX though.

xapata 9y ago

You're speaking of long term capital gains. Day trading results in short term gains which are taxed at regular income rates. Margin accounts are also generally foolish; a way to lose money. They are not usually at favorable rates.

nullnilvoid 9y ago
The rate for margin is yearly 8% for my brokerage account. The NASDAQ has gone up 15% since Trump got elected. If you use it wisely, it is great leverage. The poor don't even get to use it. They are completely shut out of the opportunity.
- xapata 9y ago
  How much leverage do you think a poor person should take for speculating in the stock market? 15% annual return on nothing is still nothing. For most poor, doubling salary would have dramatically more impact than doubling their savings account.
  - nullnilvoid 9y ago
    > 15% annual return on nothing is still nothing. This says how disconnected you are from the reality. Many Americans don't even make $100 a day. $10,000 investment plus $10,000 margin multiplied by 15% is significant for many people to buy food and pay rent.
    - xapata 9y ago
      Oh boy. Your criticism is that I overestimate wages and your counter-example is a $10,000 investment? "Nearly half of Americans would have trouble finding $400 to pay for an emergency" (https://www.theatlantic.com/magazine/archive/2016/05/my-secret-shame/476415/ https://www.theatlantic.com/magazine/archive/2016/05/my-secr...). How are these sub-$100 per day folks going to scrape together $10,000 for investing?
      - nullnilvoid 9y ago
        Anywhere below $25,000 does not get the opportunity to use the margin. $10,000 is still far from hoop. $100 per day will get you $2,500 per month conservatively. For a few months of tight pants, you will be able to save enough for $10,00-. You are missing the point here. It is about the principle. Everybody is created equal and should get equal opportunities (at least in terms of law).
        xapata 9y ago
        I agree with the principle of equal opportunity, but I disagree with the implementation. Providing the "opportunity" to buy stocks on margin to people with less than $25k in their accounts is more like selling cigarettes than selling education. Just today I noticed a sign posted in the window of my corner store, "Customers of [convenience] store won $1,490,823 from [state] lottery in 2016!" I wish it were required to post the total paid as well. It'd be much better for the public if the sign read, "People in your neighborhood paid $3 million to the state lottery and only won $1 million back." Similarly, if the brokerage is going to offer margin accounts, they should post easy to understand statistics on how much customers earn and spend. A nice histogram showing returns with sliders to select a bucket for initial amounts invested and proportion bought on margin. Enforcing free information access is another way that governments can help provide equal opportunity.

nradov 9y ago

This is ridiculous. Poor people aren't going to get rich by day trading on 2x margin. And if someone in the US seriously wants to get into margin trading it's not that tough to scrape together $25k by getting a second job and living frugally for a couple years. Also if you have decent credit you can simply take out an unsecured personal loan for $25k and deposit that in your trading account. This is effectively the same thing as trading on margin.

nullnilvoid 9y ago
Why do the poor have to get a second job in order to get 2x margin? Why do they have to jump through the hoop when the rich don't have to? If the poor have $2,000, why cannot they use margin as leverage? The opportunities are not equal there.
- nradov 9y ago
  Why is life not perfectly fair for everyone? If the margin trading limit was lower then the news would be full of sob stories about how greedy brokerages let unsophisticated people get in over their heads and then took their life's savings on a margin call. Sometimes stocks go down.
  - nullnilvoid 9y ago
    It is not fair for everyone. But this is an artificial, unneeded hoop that could be easily removed. If we set it at $25,000, does that prevent "unsophisticated people take their life's savings on a margin call"?

nl 9y ago

The alternative reading of that is that the rich can afford to lose more. I'd note that the OP lost all their gains and ended up breaking even - and that was with their father stopping them shorting. If they had been short they could easily have been ruined. Asking people to have a $25K buffer before they start gambling isn't entirely an unjustifiable idea.

mortehu 9y ago

The poor can buy SPLX though.