Hi, I’m an algo trader looking to potentially switch from Fidelity. I had a couple questions on how my day trade buying power will be calculated compared to how it works with Fidelity.
With Fidelity I have what’s called “Margin Debt Protection”. This is for people like myself which don’t intend to trade with more than the cash that I have available but want the advantage of not having to deal with things like Settlement Dates / Good Faith Violations.
First Question - From what I understand, with Alpaca that doesn’t exist. I just have regular margin which would do the same thing.
For my next question it’s important to have a bit of context. I only (currently) trade leveraged ETFs TQQQ and SQQQ. Since this is 3x leverage, it’s important to keep in mind the 75% margin requirement here. With Fidelity, the issue I run into is that I can only actually ever trade 66% of my cash in order to avoid day trade calls. The calculation for this logic is below:
$10000 cash, purchase $6666 of TQQQ on Monday. Hold overnight. We’ll assume the value of the stock has not changed at all since purchase. On Tuesday, the Exchange requirement of 25% would be $1666.5, plus the unused cash of $3333, and then divided by the margin requirement of 75% for 3x leveraged ETFs, we get the day trade buying power of $6666. So even though the cash is mine, I don’t get all of it to trade. On Tuesday if I sell, then purchase more than $6666, then sell it on the same day, I would incur a day trade call.
With TD / Schwab, they actually will credit the difference when I sell so that I can trade with my full cash amount of $10000. Incredibly beneficial for my use case. Unfortunately they are in the process of merging so they aren’t approving new API access.
Second Question - Does Alpaca operate like Fidelity, or like TD/Schwab in this scenario?
Thanks in advance and my apologies for the long explanation!