Top FAQs | TradeStation (2024)

When you establish a futures position, the full initial margin is decremented, in real time, from your account’s purchasing power. Because certain electronic indices can be traded using the day-trade rate, your account may reflect a negative purchasing power figure. Just because your purchasing power shows a negative figure, this does not necessarily mean you have a margin call.

Example: Your account net worth is $3,000; you are eligible for the day trade rate and you purchase one E-mini contract. The day trade margin on one E-mini is approximately $1,406., with initial margin of $5,625/4. Your purchasing power figure will be -$2,625 ($3,000-$5,625).

Example: Your account net worth is $5,000; you are eligible for the day trade rate and you purchase four E-mini NASDAQ contracts. The day trade margin on four E-mini NASDAQ contracts is $4,000, or $1,000 per contract. Your purchasing power figure will be -$9,000 ($5,000-$14,000).

Please contact the Futures Trade Desk at 800.837.8951 for further details.

Non-Day Traders may execute up to three day trades in a five-trading-day period. If exceeded, the Non-Day Trader will be reclassified as a Pattern Day Trader, and all of their margin accounts will become subject to Pattern Day Trader rules. See the “Pattern Day Traders” question below for more details. The sum or total number of all margin day trades that have been executed in the previous 4 trading days can be viewed in the platform’s “Balances” section.

Additionally, each individual margin account that is held by a Non-Day Trader is limited to three opening transactions per day, less the number of day trades in that account made in the preceding four trading days. For example, if you have made two day trades in one of your margin accounts in the preceding four trading days, you will be permitted to place one new opening transaction in that account (buy or sell short) on the current day. You will still be able to place as many closing transactions (sell, buy to cover) as you would like on the current day. In some cases, this limitation may not stop the Non-Day Trader from being reclassified as a Pattern Day Trader.

You may qualify to have this opening transaction limitation removed across all your margin accounts. Please talk with the Equities Trade Desk for details.

You may elect to either:

• Contact the Equities Trade Desk and request a one-time courtesy exception with the understanding you no longer intend to day trade or trade in a way that is consistent with a pattern day trade designation. However, if you have already used a one-time exception, the pattern day trade designation will be permanent.

Or

• Request to have your margin account be reclassified as a cash account. The account must be able to withstand the 100% margin requirement of a cash account before it can be converted. This will allow you to place unlimited non-margined trades, provided your account has settled funds to place a trade. Remember that the settlement period for a stock sale is T+1 effective May 28, 2024 (one business day after trade date) and the settlement period for options sales is T+1 (one business day after trade date).

The Fully Paid Lending Program is available to all TradeStation clients who meet the following criteria:

• A minimum of $25,000 in total net worth OR one (1) years of trading experience
• An equities account (excluding custodial accounts)
• Signed disclosures and a Master Securities Lending Agreement (MLSA) separate from any previously executed margin agreement.

You can opt in to the program by clicking clicking here.

• All qualified clients who open accounts on or after 2/15/19 are automatically enrolled in the program.
• For existing clients who opened an account prior to 2/15/19, visit the Client Center to enroll in the program.
• For existing clients whose eligibility criteria has changed, please complete and submit the Client Information Update form and then visit the Client Center to enroll.

1. We identify securities in your account that qualify for lending.
2. Based on market demand, some or all of your eligible securities will be lent out.
3. You’ll accrue daily income while your securities are out on loan.
4. Once securities on loan are sold or if the loan is recalled, income stops accruing to your account.
5. All securities on loan and accrued interest will be reflected in your monthly statement.

TradeStation offers two types of equities accounts: margin and cash.

Margin Accounts:

• Day trade qualified accounts (FINRA day trading rules, accounts above $25,000 equity)
• Non-day trade qualified accounts (accounts below $25,000 equity, trade restrictions)

Cash Accounts:

• Day trade rules do not apply to cash accounts and accounts are not restricted to three opening trades/day minus prior four business days’ day trades.
• Must wait for sale proceeds to settle before they can be reused (two business days for equities, one business day for options)
• Clients may not sell short in a cash account

If an equity is not “easy to borrow,” clients may contact the Equities Trade Desk and we will attempt to locate shares for you to short. A Trade Desk representative will enter your order on the platform. You will then be able to modify/cancel the order yourself. There is no additional charge for this service. Please visit our Contact Us page for Trade Desk hours and more information.

*Short-debit fees are applicable

Please check one or more of the option strategies and training objectives you may wish to employ:

1. Covered Call Writing, Protective Puts – Income
2. Long Puts/Calls, Collars, Covered Puts, Long Straddles/Strangles – Income and Growth
3. Put/Call Spreads – Income and Growth
4. Uncovered Put Writing – Income, Growth, and Speculation
5. Uncovered Call Writing – Income, Growth, and Speculation

Cash accounts are eligible for covered calls, protective/covered puts, buying calls/puts, and European index spreads.

Margin accounts are eligible for all cash objectives, options spreads, short straddles/strangles, and uncovered calls/puts.

You have three buying power indicators in your margin account(s), which work as follows.

Day Trading Marginable Equities Buying Power

• This indicator will ultimately determine new order approval, and therefore will prevent new orders from exceeding this figure.
• It is capped to the “Beginning Day Trading Marginable Equities Buying Power.”
• It reflects open and filled orders.
• This indicator acts on a 1:1 ratio for fully marginable securities only; it assumes a 25% margin requirement on the purchase, hence 4:1 leverage.
• It only replenishes or increases from closing day trades.
• It will not increase from the liquidation of positions held overnight.

Overnight Marginable Equities Buying Power

• This indicator reflects open orders, filled orders and account appreciation and depreciation.
• It will not prevent you from opening new positions, and therefore is an indicator of a possible margin call if day trades are not closed out before the end of the day.
• This indicator acts on a 1:1 ratio for fully marginable securities only.

Option Buying Power

• This indicator is capped to the lesser of 50% overnight buying power and/or 25% day trading buying power.
• It will determine your options order approval, and therefore prevent options orders from exceeding this figure.
• This indicator reflects open and filled orders.

Your day trade marginal equities buying power figure is based on the premise that the stock you are purchasing is set to the 25% day trade requirement. Certain equities, for risk-related reasons, may be set at a higher margin requirement (50%, 75%, etc.). Any equity that carries a margin requirement higher than the 25% day trade rate can be found on the Special Margin Requirements page in the TradeStation Client Center. To determine the dollar amount of a security that can be purchased or sold short, you can use the following formula:

Day Trade Buying Power (DTBP) x .25/SMR%

Examples:

• You wish to purchase SKF, which carries a 60% requirement, and your current DTBP is $200,000. How much SKF can you purchase? ($200,000 x .25)/.60 = $83,333. You can purchase up to $83,333 worth of SKF.
• You wish to short SDS, which carries a 60% requirement, and your current DTBP is $350,000. How much SDS can you sell short? ($350,000 x .25)/.60 = $145,833. You can sell short up to $145,833 worth of SDS.
• You wish to short NUGT, which carries a 90% requirement, and your current DTBP is $500,000. How much NUGT can you sell short? ($500,000 x .25)/.90 = $138,888. You can sell short up to $138,888 worth of NUGT.
• You wish to short DRYS, which carries a 100% requirement, and your current DTBP is $300,000. How much DRYS can you sell short? ($300,000 x .25)/1.0 = $75,000. You can sell short up to $75,000 worth of DRYS.

Generally, options contracts that close in-the-money by $.01 or more on the last trading day before expiration will be auto-exercised. You must ensure that sufficient buying power is in the account if you plan on being exercised or assigned. Short option holders do not have any control over when assignments will occur; only the probability of such can be estimated. No options traders can know when stocks will be halted from trading or removed from Ex by Ex-automatic “in-the-money” exercise processing at the Options Clearing Corporation (see its website for memo releases).

If sufficient equity or buying power is not in the account, or if you wish to avoid taking possession of the underlying assets of an options contract that may lead to a highly margined transaction and substantial risk exposure, the options position or strategy may simply be unwound by taking market action before the expiration of trading. TradeStation reserves the right to close out any options position or deny an auto-exercise of such if an account has insufficient equity or buying power to collateralize the resulting transaction. Account owners are responsible for all options-related transactions and financial obligations in their accounts.

No. Trading short is only allowed in margin accounts; therefore, if you are eligible to complete an application online, it is imperative that you apply for margin.

Note: All applicants using a paper application, if qualified, will automatically be given margin permissions. If you decide that you do not want a margin account, please contact an account representative at 800.808.9336.

December 29, 2023

• SEP and SIMPLE contributions are reported on a calendar year. Contributions received by the Dec 29, 2023 due date will be reported on the tax year 2023 form 5498.

January 31, 2024

• Official due date for Equity Trust to mail out 1099R statements. Form 1099R reports distributions for traditional IRAs, Roths, SEPs, and SIMPLEs.

April 15, 2024

• Official taxpayer filing date. If taxpayers wish to file for an extension, the extension must be submitted by April 15, 2024.
• Last day to make a 2023 IRA contribution. Extensions of time to file do NOT grant additional time to make an IRA contribution. Exceptions apply for individuals living in a federally recognized disaster area.

May 31, 2024

• Equity Trust will mail out 5498 forms by May 31, 2024.

Yes. Once your Consolidated Form 1099 is posted, you can access it through the TradeStation Client Center:

• Log in to the Client Center
• Select Accounts from the main navigation menu
• Expand Equities Accounts in the left navigation menu
• Select Account Statements from the left navigation menu.

View this video to learn how to download your TradeStation trading activity for tax preparation.

TradeStation clients may import equities dividend, interest and buy/sell information directly into TurboTax^®. However, Section 1256 contracts, such as regulated futures contracts, foreign currency contracts or non-equity options, must be entered manually. (Scroll down for additional information regarding Section 1256 contracts.) Wash sales will be calculated after import.

• Locate your Consolidated Form 1099. If you need to download a copy online, click here.
• Open TurboTax^® and display your tax return.
• Click the File
• Select Import, then From Financial Institution.
• In the search box provided, type TradeStation to locate and select TradeStation in the lower window (it will stay highlighted), and then click the Continue button.
• Type your 8-digit TradeStation Account Number and the 11-digit alphanumeric Document ID included at the top of your Consolidated Form 1099, then click Continue.
• Check all of the checkboxes under These documents are Now Ready for Import and click Import Now.
• Click the Done button at the bottom of the Import Summary

View this video to learn how to import your TradeStation trading activity into TurboTax^®.

TradeStation clients may import equities dividend, interest and buy/sell information directly into TurboTax^®. However, Section 1256 contracts, such as regulated futures contracts, foreign currency contracts or non-equity options, must be entered manually. (Scroll down for additional information regarding Section 1256 contracts.) Wash sales will be calculated after import.

• Locate your Consolidated Form 1099. If you need to download a copy online, click here.
• Log in to your online TurboTax account and display your tax return.
• Click the Federal Taxes menu item in the left-hand sidebar, click Wages & Income, and then click I’ll choose what I work on.
• Browse to the Investment Income
• Click the Start button next to Stocks, Mutual Funds, Bonds, Other.
• If you sold any investments during the tax year, select Yes when prompted.
• In the search box labeled Import from my bank or broker, type TradeStation, then select TradeStation, and click Continue.
• Type your 8-digit TradeStation Account Number and the 11-digit alphanumeric Document ID included at the top of your Consolidated Form 1099, then click Continue.
• Check all of the checkboxes to ensure all of the data available is imported and click Import Now.
• Click the Done button at the bottom of the Import Summary screen.

View this video to learn how to import your TradeStation trading activity into TurboTax^®.

If you need to edit imported data:

• Open TurboTax^® and display your tax return.
• Click Federal Taxes.
• Click Wages & Income.
• Click I’ll choose what I work on in the middle of the page.
• Scroll down to the Investment Income.
• Click Start or Update to the right of Stocks, Mutual Funds, Bonds, Other.
• Click Edit to the right of the transaction and click Continue on the next screen.
• Select Edit and make any necessary changes.
• Scroll to the bottom and click Continue.

Section 1256 contracts claim a profit/loss based on year-end value, even though the contracts haven’t been closed. Examples of Section 1256 categorized contracts include:

• Regulated futures contracts
• Foreign currency contracts
• Non-equity options
• Dealer equity options
• Dealer securities futures contracts.

When you import your TradeStation account information into TurboTax®, your Section 1256 transactions will not be included. To report Section 1256 contracts, simply complete the following steps within TurboTax®:

• Open TurboTax® and select your tax return.
• Click the tab titled Federal Taxes, and then select Wages & Income.
• Click the button I’ll choose what to work on.
• Under the Investment Income section, locate the section titled Contracts and Straddles and click the Start button provided.
• When prompted by the question Any Straddles or Section 1256 Contracts? click Yes.
• Select any special elections that may apply to you.
• On the Contracts and Straddles page, choose the box next to the Section 1256 Contracts marked-to-market.

• Select how you would like to enter your transactions.

• If you require further assistance with reporting your Section 1256 contracts to the IRS, please contact a qualified tax adviser.

Yes. Once posted, you can download tax activity for your TradeStation equities account through the TradeStation Client Center.

• Log in to the Client Center
• Select Accounts from the main navigation menu
• Expand Equities Accounts in the left navigation menu
• Select Tax Center from the left navigation menu
• The following formats can be exported:
• QIF (GainsKeeper)
• CSV (TradeLog®, TaxAct®)
• OFX (TradeAccountant®)
• QFX (TurboTax®)

Form 1099-B reports a sale’s gross proceeds less commission. Brokerage firms are required to communicate cost-basis information to one another, so equity purchases made in the current tax year and transferred to TradeStation should be transferred with the cost-basis information. The 1099-B now shows the following additional information below for covered securities:

• The disallowed loss amounts due to wash sales.
• The designation of long- or short-term gain or loss.
• The cost basis for securities sold, corporate actions and adjustments for wash sales.

The default lot relief method for all asset classes is first-in, first-out (FIFO). We are required by law to apply FIFO unless you specifically instruct us to use another method. The following lot relief methods are available:

• First-in, first-out (FIFO) – This method assumes that the shares sold were the first shares purchased.
• Last-in, first-out (LIFO) – This method assumes that the shares sold were the last shares purchased within the account.
• High cost – This method assumes that those shares sold first are the highest-cost shares.
• Low cost – This method assumes that those shares sold first are the lowest-cost shares. This method does not consider the length of time the shares were held.
• Hand chosen – This method assumes the account owner will identify the specific shares that are sold.
• Average – This method keeps a running tally of the average cost of security shares that are purchased or sold over time, including reinvested dividends. Typically, this method is only available for qualifying mutual funds and most ETFs. It is important to note, however, that once you sell shares of a security using the average cost method, any remaining shares are also locked into that method. However, the method can be changed for any new shares purchased after that sale.

You may configure the default lot relief method to be used for each security type (stocks, ETFs, options, and mutual funds) within each account, as well as per position, using the Gain/Loss Tax Management feature in the Client Center.

The default tax lot relief method for all asset classes is first-in, first out (FIFO). However, if you prefer to set a different tax lot relief method for a given security type (stocks, ETFs, options, or mutual funds) you can do so through the Gain/Loss Tax Management feature in the Client Center.

• Within the Gain/Loss Tax Management feature, click the Lot Relief Methods tab.
• In the box titled Lot Closing Settings, click the Change button.
• Under the section titled Default Methods, select the new default tax lot relief method desired for each asset type.
• If you prefer to use the Average method, when supported by the security, you must select the option titled Use Average instead of the defaults above under the section titled Average Eligible Securities.

Clients have until December 31, 2017, to inform TradeStation that they are electing to report their mutual funds’ cost basis using a FIFO method. We will adjust the data for trades placed in 2017, but not for those made prior to the 2017 tax year. Send your notification via email to [email protected].

Or mail to:

ATTENTION: Client Services – Mutual Funds FIFO Method
TradeStation Securities
8050 SW 10th Street, Suite 2000
Plantation, FL 33324

Please provide the following information:

Name:
Joint Name (if applicable):
Address:
Telephone Number:

I/We wish to elect the first-in first-out (FIFO) method of cost accounting for the mutual fund covered shares held in the accounts listed below. List account number(s) covered by your selection:

The default tax lot relief method for all asset classes is first-in, first out (FIFO). However, if you prefer to set a different tax lot relief method for a given security type (stocks, ETFs, options, and mutual funds) you can do so through the Gain/Loss Tax Management feature in the Client Center.

• Within the Gain/Loss Tax Management feature, click the Lot Relief Methods tab.
• In the box titled Closing Transaction Log, find the position for which you want to adjust the lot relief method, and click the Edit link.
• Change the lot relief method as desired and save your changes.

You can edit the cost basis of your unsettled transferred positions or unsettled uncovered positions under the Tax Lot Transfers tab of the Gain/Loss Tax Management feature in the Client Center.

• Under the Tax Lot Transfers tab, you will be provided with the total quantity for each lot within the account selected.
• To adjust a lot, click the Edit link under the Actions column. Enter the total cost basis for the lot, including any commissions/fees paid. This will be used to calculate your total gain or loss. If you are entering the cost basis for a short position, the information will need to be entered as a negative. The transaction date should be the date the opening transaction took place.
• To enter information for another lot, click the Add Another Row link and repeat the steps above. As you add rows, the quantity of shares entered will be automatically calculated and validated against the expected total.
• Once you have assigned a cost basis for all shares and are ready to save, click the Save Changes. Click the Cancel link if you wish to undo your changes.
• You will be served a confirmation summarizing the information you entered. After verifying the information, click on Submit to save.
• You will be returned to the summary of your lots with the changes applied. The revised information will be used to calculate your future gains and losses.

As a part of the Emergency Economic Stabilization Act of 2008, TradeStation is responsible for reporting its customers’ cost basis, short- and long-term gains or losses and wash sales to the IRS via the revised Form 1099-B. Previously, we were required to report only the gross proceeds less commissions of a sale.

TradeStation is not required to report wash sales for accounts for which you made a valid “mark-to-market” election under IRS code section 475(f)(1).

Please consult with your tax advisor and/or refer to Publication 550 (Investment Income and Expenses) on how to make the mark-to-market election with the IRS. Once you receive confirmation of your election from the IRS, notify TradeStation, in writing (email is acceptable), of the identity of your TradeStation accounts as solely containing securities subject to the election. If you made such an election with the IRS and you fail to notify us, we will report your wash sales, possibly subjecting you to income tax reporting discrepancies.

Upon receipt of your election under IRS code section 475(f)(1), we will refrain from reporting wash sales in the referenced account(s) for future tax years unless and until you subsequently inform us, in writing (email is acceptable), that the election no longer applies to you or to the account(s). If so informed, we will prospectively report wash sales for your account(s).

Please download, complete and submit the Mark to Market Election – Exclude Wash Sale form to opt out of wash sale reporting, subject to qualification.

For the current tax year, TradeStation will not be reporting cost basis for IRA accounts to customers or the IRS. Cost basis may be reported to customers for informational purposes, but as this is not currently required by the IRS, cost-basis pages will only display IRA cash balances.

For mutual funds, TradeStation uses average cost as its default cost-basis accounting method. If you wish to use the average cost method, no action is required at this time. Average cost for an account is calculated by adding up the cost of all covered purchases in the account (made after January 1, 2012) and dividing that total by the number of covered shares in the account. Under the average cost method, shares are redeemed in first-in first-out order, but the cost basis for all shares will be the calculated using average cost. TradeStation also provides FIFO as a cost-basis accounting method as an option for mutual funds. For more information, please contact your tax adviser or accountant.

For ETFs, TradeStation uses FIFO as its default cost-basis accounting method.

All brokerage customers have access to the TradeStation desktop, web trading, and mobile apps, as well as our most powerful desktop add-on components (RadarScreen®, OptionStation Pro®, and Portfolio Maestro®). Brokerage customers who have a funded account will also have access to free simulated accounts which can be used to hone your trading skills using any of our platforms.

Non-professional equities customers on our flagship commission plan, TS Select, are provided free real-time data for the major equity exchanges.

New non-professional futures customers on our flagship commission plan are provided real-time data for Futures markets (Level 1 Data and Market Depth Data packages) at no cost for the first 90-days. Thereafter, the $40 monthly data fee is waived for non-professional traders who are billed $40 or more in futures commissions in the previous month. To view the details of the data packages that they are subscribed to, or to edit them, they may visit the Software and Data Subscriptions section of the Client Center.

Customers on other legacy commission plans may be subject to a $149.95 monthly account service fee, plus fees for any real-time exchange data to which they are subscribed. The account service fee is waived if the minimum trading or balance requirements are met.

Each brokerage account is subject to a monthly inactivity fee of $10; this fee can be waived by having a $5,000 average end-of-month equity balance during the previous 90-day period, or completing at least ten (10) trades during the previous 90-day period.

There are two ways you can open an account with TradeStation.

• If you are a U.S. resident with a valid taxpayer identification or Social Security number, the fastest, most convenient way to open a futures or equities/options account is by using our online application process. You may use this process to open individual, tenants in common, joint tenants with right of survivorship and traditional/Roth/SEP IRA accounts. You can open multiple accounts across multiple asset classes during your session.

• For U.S. residents who wish to open a futures IRA account, international residents or applicants establishing an account(s) on behalf of an entity, paper applications are required. You may obtain account opening forms online in PDF format for all asset classes for the following account types: Roth and traditional IRA, sole proprietorship, corporation, partnership, trust and Limited Liability Company. For these options, you will need to print, sign and mail these forms once completed.

All applicants must provide basic identifying information such as name, date of birth, permanent address and, if applicable, valid Social Security or tax ID number.

Applicants are also required to provide details of their financial condition and investment experience, such as annual income, total and liquid net worth, years of trading experience and activity in each asset class.

For international clients, a valid passport and address verification dated within the last 60 days are required. Acceptable forms of address verification include, but are not limited to, utility bills, bank or brokerage statements and lease agreements.

The documents listed below are required. Please be sure to include all the documents applicable to your firm for all entities that are a part of your firm. For example, a limited partnership that has a Limited Liability Company as the general partner must provide all applicable documents for both the limited partnership and Limited Liability Company.

Limited Partnership

• Certified Certificate of Limited Partnership
• Partnership Agreement
• Subscription Agreement (if used for investing partners)
• Private Placement Memorandum (if used in raising capital)

Corporation

• Certified Articles or Certificate of Incorporation
• Bylaws
• Corporate Resolutions reflecting current officers and directors
• Subscription Agreement (if used for investing stockholders)
• Private Placement Memorandum (if used in raising capital)

Limited Liability Company

• Certified Articles Of Organization
• Operating Agreement
• Subscription Agreement (if used for investing members)
• Private Placement Memorandum (if used in raising capital)

Trust

• First and last page of the trust

Sole Proprietorship

• State registration document

Joint tenants with rights of survivorship (JWROS) is an account in which each account owner has an equal and undivided interest in the cash and securities in the account. Upon the death or declaration of incompetency of any account owners, account ownership passes to the survivor(s).

Joint tenants in common (JTIC) is an account in which each owner has a percentage interest in the account. Upon the death or declaration of incompetency of any of the account owners, the deceased owner’s percentage interest is retained by that owner’s estate and is not passed to the surviving tenant(s).

The following items are required:

• Equities IRA application
• Decedent’s death certificate
• Most recent account statement.

You are deemed a “Non-Professional” data subscriber if you meet all of the following requirements:

• You are either a natural person or a qualifying trust.
• You will use the data for your personal investment (non-business).
• You do not meet any of the requirements for a Professional data subscriber noted below.

You are deemed a “Professional” data subscriber if you meet any of the following requirements:

• You are registered or qualified with the SEC, CFTC, any state securities agency, any securities exchange/association or any commodities/futures contract market/association.
• You are engaged as an investment advisor as defined in the Investment Advisors Act of 1940.
• You are employed by a bank or other organization exempt from registration under federal and/or state securities law to perform functions that would require you to be so registered or qualified if you were to perform such functions for an organization not so exempt.

Information about your account can be found online in the TradeStation Client Center.

Yes. Please contact TradeStation Client Services to request this service.

Confirmations are available through the TradeStation Client Center.

Account statements are available through the TradeStation Client Center.

To close your account, please contact TradeStation Client Services.