Did something silly, need advice

[diliff]

Let me explain. I'm no veteran trader but I've been doing a bit of investing recently and have dabbled in a bit of day trading with moderate success where I saw opportunities.

I'm using a Westpac Broking account with an attached Westpac bank account to trade. Today, I bought about $50,000 worth of a stock with the intention to sell it before the end of the trading day. It was up slightly and I was looking at making about $500-600 after brokerage fees when my internet connection dropped out with about 5 minutes before the end of trading for the day.

By the time I got back on, trading had ended and I lost the ability to sell. Here is where the problem lies. If I had been able to sell it the same day, settlement would have essentially involved receiving or paying up whatever the difference + brokerage fees was, and I could afford to take a small loss if necessary. But because I didn't sell, I'm not going to have the $50,000 in my bank account on settlement day. I intend to sell tomorrow now (and hopefully not take a loss if it gaps )

What are the implications of this? Westpac's site doesn't seem to give any indication of penalties/interest if you cannot pay up on the settlement date. Has this happened to anyone before and are they likely to understand/compromise at all? Any advice appreciated.

 

[grantk]

Why don't you call the brokers service desk?

 

[diliff]

Why don't you call the brokers service desk?

I will in the morning I think, they're only open to 7pm aren't they? Just wanted to see what people thought here, so I knew what to expect.

 

[roland]

If you have a reasonable track record with the bank, they will probably just charge you an overdraw fee - used to be $50

 

[grantk]

Yes that has happened to me in the past - whacked with a late fee:bazooka:

 

[malachii]

You may find there is no charge - with Comsec if you sell before the close of business the next day there is no charge.

malachii

 

[nioka]

Let me explain. I'm no veteran trader but I've been doing a bit of investing recently and have dabbled in a bit of day trading with moderate success where I saw opportunities.

I'm using a Westpac Broking account with an attached Westpac bank account to trade. Today, I bought about $50,000 worth of a stock with the intention to sell it before the end of the trading day. It was up slightly and I was looking at making about $500-600 after brokerage fees when my internet connection dropped out with about 5 minutes before the end of trading for the day.

By the time I got back on, trading had ended and I lost the ability to sell. Here is where the problem lies. If I had been able to sell it the same day, settlement would have essentially involved receiving or paying up whatever the difference + brokerage fees was, and I could afford to take a small loss if necessary. But because I didn't sell, I'm not going to have the $50,000 in my bank account on settlement day. I intend to sell tomorrow now (and hopefully not take a loss if it gaps )

What are the implications of this? Westpac's site doesn't seem to give any indication of penalties/interest if you cannot pay up on the settlement date. Has this happened to anyone before and are they likely to understand/compromise at all? Any advice appreciated.

No problems I trade with westpac. You have the three days to sell something and they will contra any money owing. Click (on Westpac broking site) onto "Trading centre" then onto "trading funds" and you will see the amount they will cover. A warning though; don't make a habit of using it as cheap three day credit as you can get caught.

You must have had the available trading funds available or the trade would have been refused.

 

[diliff]

No problems I trade with westpac. You have the three days to sell something and they will contra any money owing. Click (on Westpac broking site) onto "Trading centre" then onto "trading funds" and you will see the amount they will cover. A warning though; don't make a habit of using it as cheap three day credit as you can get caught.

You must have had the available trading funds available or the trade would have been refused.

Ahhh, thanks for that.

You're right that in a sense I was using it as cheap credit, albeit repaid the same day (in theory). I try to keep all my cash invested if possible (although will keep cash holdings if things are bad across the market, I suppose), so when I see an opportunity, I often don't have funds available to benefit from it.

Where does it say that you have 3 days? And what do you mean by 'get caught'? Do you mean caught without the ability to cough up for the purchases? I'd like to think that I don't make risky enough trades that I wouldn't be able to cover the 'loan' within 3 days, but I accept your point. Best not to play with fire.

 

[diliff]

Ah. I found it.

Where contracts have the same settlement date, Westpac Broking will offset the net amount of buys and sells on the settlement date. You will find this date on your contract note.

We offset all trades made on the same day. If no trades are made in the subsequent two days we will then debit or credit the full settlement amount from/to your nominated bank account.

If trades are made in the two days following your initial trade, your funds will be offset over those days as specified below:

If the net amount of your contracts is a debit, any sell contracts that are due for settlement within the subsequent two settlement days will be offset. Respectively, if the net amount is a credit, any buy contracts will be offset.

Thats good news anyway. It had me worried that it could end in tears/excessive penalties/etc. Out of interest (I'm not planning on tempting fate, just curious), what happens AFTER 3 days?

 

[nioka]

Ahhh, what do you mean by 'get caught'? Do you mean caught without the ability to cough up for the purchases?.

Getting caught example. I would bet that there were some traders using the three day rule and trading CNP and CER hoping for the news of the finance approval to come through in the three day period. Then came a trading halt for 1 week. TROUBLE.

I know of one who was doing the same trading Gympie Gold. A fire in the coal mine and shares in suspension. TROUBLE.

He should have known better because he was still recovering from the same thing happening with the same company when a long wall collapsed a few months earlier. TROUBLE then too.

What happens after 3 days? TROUBLE.

Slow and steady wins the race. Think how it would have been for you if the stock you bought had gone into a trading halt. Would it have been TROUBLE.?

 

[Timmy]

Well, I dunno - missing settlement is pretty serious - look what happened to Tricom ...

 

[diliff]

Getting caught example. I would bet that there were some traders using the three day rule and trading CNP and CER hoping for the news of the finance approval to come through in the three day period. Then came a trading halt for 1 week. TROUBLE.

I know of one who was doing the same trading Gympie Gold. A fire in the coal mine and shares in suspension. TROUBLE.

He should have known better because he was still recovering from the same thing happening with the same company when a long wall collapsed a few months earlier. TROUBLE then too.

What happens after 3 days? TROUBLE.

Slow and steady wins the race. Think how it would have been for you if the stock you bought had gone into a trading halt. Would it have been TROUBLE.?

Yep, point taken. One question though. If you were to keep buying and selling, each time without exceeding the three days, you would essentially never have to provide the funds as there would always be an upcoming settlement to cover the previous one, right? Or am I missing something there? As I interpret it, as long as there is an upcoming settlement that will cover your due settlement, they won't touch your account?

 

[white_goodman]

Yep, point taken. One question though. If you were to keep buying and selling, each time without exceeding the three days, you would essentially never have to provide the funds as there would always be an upcoming settlement to cover the previous one, right? Or am I missing something there? As I interpret it, as long as there is an upcoming settlement that will cover your due settlement, they won't touch your account?

thats what im getting out of this,,,, might aswell start making million dollar ivnestments and selling up the same day..... how about that for risk for a uni student

 

[nioka]

thats what im getting out of this,,,, might aswell start making million dollar ivnestments and selling up the same day..... how about that for risk for a uni student

Just don't get too carried away with the idea. Your broker/banker has given or will give you a trading limit. But providing the market never drops the plan will work within those limits. Many a beginner has found the end of their trading career doing what you suggest.

 

[tigerboi]

Reckon you are playing with fire there mate..clever maybe but you get a trading halt/suspension. your a goner!...

shouldve followed my weekend tips for real baggers...tb

 

[mfp]

are they likely to understand/compromise at all? Any advice appreciated.

Not a snow ball's chance in hell mate. I average about 20 trades a week and I have had various unfortunate things happen to me which I thought at the time were entirely Westpac Broking's fault or would at least be looked upon with some compassion by them and result in them compensating me for losses or missed profits. But each and every time they wiggled their way out of it and accepted no blame. The best they've ever offered me is 4 brokerage free trades. One smart **** even told me they don't care how many trades I do with them.

 

[white_goodman]

Just don't get too carried away with the idea. Your broker/banker has given or will give you a trading limit. But providing the market never drops the plan will work within those limits. Many a beginner has found the end of their trading career doing what you suggest.

yeh im not that stupid ill gamble within my means

 

[diliff]

OK, theres just one point I'm not completely clear on. Say, for example, that I buy $100,000 worth of shares on Day 1. On Day 2, I sell them, and lets say I break even, selling them for $100,000 again. At this point, because the settlement of the two values is the same, there is no net debit/credit of my account (ignoring brokerage). But lets say I then buy $100,000 of another stock on Day 3. At this point, does this mean that Westpac will see that my overall balance is -$100,000 and try to take the money from my account? Or will they only care that there was a sale within the 3 days that covered the original purchase, and ignore the additional purchase until ITS settlement is due?

I'm thinking its the latter, but I want to get a second opinion to make sure.

 

[white_goodman]

OK, theres just one point I'm not completely clear on. Say, for example, that I buy $100,000 worth of shares on Day 1. On Day 2, I sell them, and lets say I break even, selling them for $100,000 again. At this point, because the settlement of the two values is the same, there is no net debit/credit of my account (ignoring brokerage). But lets say I then buy $100,000 of another stock on Day 3. At this point, does this mean that Westpac will see that my overall balance is -$100,000 and try to take the money from my account? Or will they only care that there was a sale within the 3 days that covered the original purchase, and ignore the additional purchase until ITS settlement is due?

I'm thinking its the latter, but I want to get a second opinion to make sure.

I'm thinking its the latter but it would also be interesting to see if anyone knows the go with this.