Go to Jeff Salisbury LWGate Home Page.From: michael_niemotka@baxter.com
Subject: RE: [CANSLIM] New trading restrictions
Date: Tue, 18 Mar 2003 08:22:14 -0600
Previous Article (by Subject): Re: [CANSLIM] New NASD trading restrictions? "Tom Worley"
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I use Ameritrade, and I have bought and sold on the same day numerous times
Mike Niemotka , PE
Sr. Principal Engineer
Baxter Healthcare Corporation
Route 120 & Wilson Road
Round Lake, IL 60073
Tel (847) 270-4075
Fax (847) 270-4525
michael_niemotka@baxter.com
"Jerome Buckmelter"
<jsjbuck@myexcel.com> To: canslim@lists.xmission.com
Sent by: cc:
owner-canslim@lists.xm Subject: RE: [CANSLIM] New trading restrictions
ission.com
03/17/2003 10:26 PM
Please respond to
canslim
Gene, I was surprised to hear that Schwab told you that they have the same
procedures as Ameritrade. I also have accounts with Schwab, and they told
me the opposite! They said that I can sell a stock and buy another the
same day with the proceeds of the first sale, no problem. The Federal
Reserve Board emailed me back today and stated that “one can sell a stock
and purchase another one the same day with the proceeds, provided that one
does not intend to sell the second security before the purchase settles.”
I would think that the FRB would have the final word on the matter, but can
one do to make Ameritrade (and, perhaps, Schwab) comply with the law and
the FRB interpretation? Again, I think Ameritrade’s interpretation can
really hurt CANSLIM investors particularly. Imagine during a bull market:
you are fully invested, and you want to sell a slower moving stock, to get
into one that is breaking out (as WON suggests); well, Ameritrade is
insisting that you would need to wait three days after the sale in order to
re-invest your money (and miss the breakout by three days). The easy
answer to this is, of course, to convert to a margin account. But what if
your account is an IRA or custodial account which is not eligible for a
margin account? What would happen if one simply ignored Ameritrade and
sold one stock and bought another with the proceeds in the same day without
waiting three days? Could they block or rescind your purchase of the
breakout stock? Could they freeze you out and your account for 90 days?
Put you in jail? Help!
-----Original Message-----
From: owner-canslim@lists.xmission.com
[mailto:owner-canslim@lists.xmission.com] On Behalf Of genr
Sent: Monday, March 17, 2003 10:16 AM
To: canslim@lists.xmission.com
Subject: Re: [CANSLIM] New trading restrictions
Jerome, I just checked with Schwab and they have the same procedures
for non-margin accounts. I believe that brokers just want to get paid
(interest) for lending you (us) money and suggest using a margin
account if additional funds are required to make a trade. The IRA
accounts require money to be in the account prior to an order (no
margin).
Can't speak for any other brokers,
Gene
----- Original Message -----
From: Jerome Buckmelter
To: 'CANSLIM LIST'
Sent: Sunday, March 16, 2003 3:20 PM
Subject: [CANSLIM] New trading restrictions
Tom Worley,
Thank you for your input. I followed your advice, and called
Ameritrade requesting that they email me the new rule. It is
attached. This is a “canned” response: It says, “Our records
indicate that you have recently sold securities in your account prior
to making full cash payment…” even though I am a new Ameritrade
customer and have never placed any orders with them yet. In
contrast to my earlier discussions with Ameritrade, this new ruling
does not appear to be from the NASD as they claimed, but rather from
the staff of the Board of Governors of the Federal Reserve System as
they now claim per the attachment. This “new rule” is further
disturbing since the only alternative is to have a margin account
which is not, according to the attachment, permitted for IRA’s and
custodial accounts. This could be devastating for us who are using
the canslim system to build our retirement account. We will be
forced to keep a large portion of our account in cash during a bull
market in anticipation of a break out or we could be fully invested
and miss every breakout by three days, after the sale settles. I
guess the main questions are: is this just an Ameritrade internal
policy as you suspected? Will other brokerages follow suit? What
do you -- and the other canslimers -- think should be done about this
onerous restriction? Again, Tom, thanks for all your help. Jerome
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