I got a text message from one of my brokers yesterday that scared me half to death. Once I realized what the problem was, I learned an important lesson about reading the fine print.
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Yesterday morning, as I was sitting down with my AM Monster Energy drink, I received this text message from TastyWorks.
Let me decode that if you’re not familiar.
A Pattern Day Trader Equity Maintenance call is a margin call. Basically, it means TastyWorks believed I didn’t have enough money in my account, and they wanted me to pay up.
But the reason I panicked was, I knew I had $34,000 in that account, and the minimum balance was $25k.
I started to freak out a bit. First I looked at my trades: nothing had gone against me so bad that this could happen.
I worried it could be fraud, but as nearly as I could tell, there were still $34,000 in the account.
Then, I started to dig, and I found something interesting in the fine print…
Uh oh! There’s the problem!
I had over $10,000 in open futures and crypto trades in that account, which dropped me below the necessary threshold in their eyes.
As I understand it, with futures and crypto trades, they transfer the money over to Apex Clearing to clear the trades.
Because those clearing companies are holding your account balance, that makes your securities balance look low.
And therefore, for a while, TastyWorks thought I had too little money in my account.
The lesson here is twofold: first, always read the fine print!
Usually, there’s something in there that can trap you if you’re not careful.
Second, it’s a reminder that even a guy who has been trading for 20 years, like me, can still get caught off guard by something.
You’re never too experienced, too knowledgeable, or too “good” to learn and improve.
So don’t sweat it when you make mistakes, either. You’re only human, after all.
Jeffry Turnmire and InvestPub do not provide investment advice. Trading involves a substantial risk of loss and is not suitable for all investors. Many traders fail and you should not trade with money you cannot afford to lose. If you need personal financial advice, consult a financial advisor.
Daily Profit Publishing and Jeffry Turnmire do not provide investment advice. Trading involves a substantial risk of loss and is not suitable for all investors. Many traders fail and you should not trade with money you cannot afford to lose. If you need personal financial advice, consult a financial advisor.
We are not licensed to provide you personalized investment advice. Nothing in these communications should be construed as personal investment or financial advice.
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