Trading on margin involves leverage and allows you to extend your financial reach by investing borrowed funds while limiting how much of your own cash you expend. For this reason, trading on margin carries a higher degree of risk, and losses could exceed the principal invested. Please be sure to review our margin disclosure (PDF) for full details about our policies.
Eligibility for pattern day trade (PDT) removal is determined on a case-by-case basis by our Margin department. We need to see that your account has held pattern day trade status for more than 90 calendar days.
If you meet the 90-calendar day requirement:
Submit your request in writing and include the statement I intend to stop PDT activities
After the PDT holding period has been met, your request can be submitted and reviewed by our team. Should the account recode as PDT after removal, the PDT holding period may be extended in additional 90-day increments for each new recurrence.
Please submit your request only after you've met the PDT 90-day requirement. Requests received before then will need to be resubmitted.
The easiest way to set up your account for margin is to apply online. Keep in mind, under Federal rules, there is a $2,000 minimum equity requirement to be eligible for margin. If your balance is below $2,000, your account has to be treated as a cash account, even if approved for margin.
You can remove margin by calling us at 1-855-880-2559 or by emailing an attachment of a pen-signed and dated letter, with explicit instructions to remove margin, to firstname.lastname@example.org.
Keep in mind, if you were labeled as a pattern day trader and removed margin previously, the pattern day trader designation will remain in effect if margin is reinstated on the account.
Buying power is the total amount of cash and margin you have available in your account to purchase securities. Learn more about margin accounts and buying power.
A margin account allows an investor to borrow money against other securities currently held in the account, such as cash or stock. Funds may be borrowed to make additional trades or they may simply be withdrawn from the account as cash. As with any loan, interest will be charged on any borrowed funds. Explore our current Margin Interest Rates
Keep in mind, industry regulations require that all margin accounts maintain a minimum of $2,000 in equity at all times. If this minimum isn’t maintained, borrowing on margin will no longer be available to the account.
Finally, there are risks to using margin. Although it's nice to have the ability to borrow money that will potentially allow you to trade more shares of stock and achieve larger profits, choosing to trade on margin also opens yourself up to the possibility of incurring larger losses which could potentially exceed your initial investment. Learn about additional risks of trading on margin
Margin accounts will either have the ability to make day trades on an unlimited basis or they will be limited to a maximum of three day trades within any consecutive five-business-day period. Determining which rule you can follow depends upon the value of your account and whether or not your account has been labeled as a pattern day trading account.
By having a margin account with at least $2,000 in account value, you may bypass the settlement rules cash accounts must follow. However, there may be restrictions on how frequently you can open and close positions in your account on the same day, depending on your account value.
You can view margin requirements and schedule at Ally Invest.
No. Short selling stock involves selling securities that you have borrowed. Cash generated from short selling is reserved in your account for the future re-purchase of the stock that was sold short. This isn’t a free cash credit and therefore isn’t eligible to earn interest. The amount of cash held for the repurchase of short stock will be adjusted to the market weekly.
Pattern day trading is a coding that's added to any margin account once that account makes more than three day trades within any consecutive five business day period. Once labeled, the pattern day trader account may continue to make day trades only if that account begins the day with $25,000 or more in account equity (stock value + cash). Should a pattern day trading account begin the day under the required $25,000 in account equity, no day trading will be permitted. Should a day trade need to be made, a broker can assist with that trade over the phone.