T+3: What's in a name?
#1
Magandang Thursday morning po sa SMPeers, SMPeeps. One time po, I asked the great Spyfrat what T+3 means. For the benefit of newbies na kagaya kong forever newbie Big Grin, eto po ang kanyang kasagutan that he so kindly asked for me to share to everyone:

T+3 means trading day plus 3 days. This is the standard period for settlement among brokers and sccp (the clearing house). With that allotted time, brokers must settle their obligations.

Example, if broker A got a transaction of 5M buying last monday, that broker must settle its due on thursday. Monday being the first day or the "T" and thursday is the 3rd day, thus T+3. If broker A got some selling of 5M, the clearing house will pay that broker the amount of 5M as well, thus the broker will issue checks to those who have a sell transactions on that day.
For clients who buys on margin and considered credit worthy, brokers do extend this facility to them. Kasi mabilis sila mag trade. in return, it is the broker's responsibility to settle the account when due date falls.

example.
spyfrat bought ore 100k @ 2.65 last friday. it means i have to pay 265k + charges come wednesday. with the t+3 facility, i have a window of until wednesday to try my luck that ore will go up otherwise come wed i will sell ore (force sell due to t+3). so kanina is the last day of my t+3, so i have to sell it otherwise i will pay for the whole amount. by selling ore, 100k @ 3.30, i gain almost 60k or so. that 60k makukuha ko from my broker (baring no more due na ako) after t+3 ulit. so sa monday may cheke na ako na 60k. yung nag bayad ng utang ko today worth 265k + charges is my broker. yung broker ko ang ng settle sa clearing house. same is true if i sold ore at a loss, i will only pay the difference. example i sold ore 100k @ 2.60, i lost 5k + charges. i pay my broker RIGHT AWAY, no another t+3.

however, many people go broke using t+3 coz they become a compulsive gambler. how to know if ur becoming one is another topic. but one symptom is you wanted to beat that stock that have beaten u countless of time. revenge is a dangerous emotion.

---sa mga gusto pong tagalugin ito or may iba pang example, feel free lang po to share para sa dagdag-kaalaman ng lahat dito. Thanks, boss Spyfrat Smile
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#2
In the stock market playing with "utang" is tantamount to playing with fire. Pretty soon your fingers get burnt. T+3 is good when you have cash to back it up come pay day but then again quoting from Discovery Channels' Gold Rush "Can't anybody risk it all in Pinas (America) anymore!". Another classic is "No Guts No Glory".
The World is a Vampire . . .
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#3
How about ung COL2x.. mas ok cguro un kc 1 month pwd gamitin.. with interest lng nga..
when GOD steps in, MIRACLE happens.....

It's more fun in FOREX!!!

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#4
by the way, paano mo babayaran broker mo? if wala ka nang cash sa account mo (pag online broker), you'll need to fund it come pay day? otherwise, syempre kukulitin ka nila to pay a.k.a. margin call?
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#5
...tama ka Aiz sa narinig mo kay bos spy...yung T+3 eh para lang sa mga traditional brokerage houses, hindi ito ubra sa mga online kasi automatic deduct sila eh. Kaya naging T+3 ito, it's because yun nga, settlement of the transaction takes 3-days, if you are the buying entity, you have 3-days from the day of the transaction, to settle yung obligation mo to pay for that said transaction. Ganun din sa nagbenta yata, although ma-re-reflect na yun pinagbentahan sa account pero hindi pa siya withdrawable (ask sa online broker, ganun din), after 3-days pa lang siya pwede makuha.

...yun T+3 per se actually eh wala naman problema yan, operations yan eh, that's how the system was built, ang nagkakaproblema lang is yung credit extension facility na offer ng mga brokers. Yan yung kapag ginamit mo within the T+3, at wala ka na sapat na pangpondo, jan nagkakaroon ng malalaking problema, hindi lang yung client, pati na rin yung broker, yung settlement

...look at this, meron ka 100k account sa isa broker...PRUDENCE dictates that you SHOULD only make transactions well within your amount which is 100k di ba? That way, settled mo yung transactions mo kahit lumampas pa ng 3 days yan, bayad yan. This is the problem, brokers offer you a CREDIT EXTENSION, explain sa 'yo yung 100k mo pwede mo ibili worth 1M, and then sabihin sayo, sayang yung opportunity kasi kung umakyat yung binili mo, sayang yung kita mo kung hindi mo ginamitan ng credit extension. Kailang i-qualify mo yung mga ganyang statements na galing sa mga brokers mo. Remember that brokers get paid via commissions right? So the more that you transact, the better it is for them. Baka pinalalaki lang nila yun commission na makukuha nila from you.

...if you are a beginner trader/investor, madadaanan mo 'yan T+3. Yung credit extension facility ang dapat mo lang pag-isipan mabuti. Yung 100k mo na gamitan mo kunwari ng extension, bili ka 1M worth kunyari ng isa bazura stock na hyped ng isa money-obsessed guru for example, e bigla bumagsak nung pumasok ka kasi beginner ka pa lang, yun 1M mo naging 850k na lang worth bigla? Patay ka na, me utang ka pa Smile

ledger ng newbie trader:

100k original account
gumamit credit facility, napautang ng broker ng 900k
bumili bazura stock na lumilipad dahil sa hype, 10M shares at 0.10 = P1M
bumagsak after two days sa 0.85 dahil nagprofit taking na, sinell short pa nung beteranong mga mang-iipit
10M shares at 0.85 = P850k
ending: wipeout ang 100k original investment, me utang pa 50k kailangan i-settle sa broker
lesson: pag baguhan, wag muna gumamit ng credit facility


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#6
well said!
The World is a Vampire . . .
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#7
nice. thanks all for your input... tama, well said...
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#8
ayun! thanks, comm for the clarification and further details. actually, hindi naman ako interesado. parang sugal na rin yan especially sa baguhan. ika nga, biting off more than one can chew. dahil diyan, mga newbies, kalimutan na yang T+3 credit extension na yan Smile
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#9
(07-10-2011, 12:13 PM)Ollie Wrote: ...tama ka Aiz sa narinig mo kay bos spy...yung T+3 eh para lang sa mga traditional brokerage houses, hindi ito ubra sa mga online kasi automatic deduct sila eh. Kaya naging T+3 ito, it's because yun nga, settlement of the transaction takes 3-days, if you are the buying entity, you have 3-days from the day of the transaction, to settle yung obligation mo to pay for that said transaction. Ganun din sa nagbenta yata, although ma-re-reflect na yun pinagbentahan sa account pero hindi pa siya withdrawable (ask sa online broker, ganun din), after 3-days pa lang siya pwede makuha.

...yun T+3 per se actually eh wala naman problema yan, operations yan eh, that's how the system was built, ang nagkakaproblema lang is yung credit extension facility na offer ng mga brokers. Yan yung kapag ginamit mo within the T+3, at wala ka na sapat na pangpondo, jan nagkakaroon ng malalaking problema, hindi lang yung client, pati na rin yung broker, yung settlement

...look at this, meron ka 100k account sa isa broker...PRUDENCE dictates that you SHOULD only make transactions well within your amount which is 100k di ba? That way, settled mo yung transactions mo kahit lumampas pa ng 3 days yan, bayad yan. This is the problem, brokers offer you a CREDIT EXTENSION, explain sa 'yo yung 100k mo pwede mo ibili worth 1M, and then sabihin sayo, sayang yung opportunity kasi kung umakyat yung binili mo, sayang yung kita mo kung hindi mo ginamitan ng credit extension. Kailang i-qualify mo yung mga ganyang statements na galing sa mga brokers mo. Remember that brokers get paid via commissions right? So the more that you transact, the better it is for them. Baka pinalalaki lang nila yun commission na makukuha nila from you.

...if you are a beginner trader/investor, madadaanan mo 'yan T+3. Yung credit extension facility ang dapat mo lang pag-isipan mabuti. Yung 100k mo na gamitan mo kunwari ng extension, bili ka 1M worth kunyari ng isa bazura stock na hyped ng isa money-obsessed guru for example, e bigla bumagsak nung pumasok ka kasi beginner ka pa lang, yun 1M mo naging 850k na lang worth bigla? Patay ka na, me utang ka pa Smile

ledger ng newbie trader:

100k original account
gumamit credit facility, napautang ng broker ng 900k
bumili bazura stock na lumilipad dahil sa hype, 10M shares at 0.10 = P1M
bumagsak after two days sa 0.85 dahil nagprofit taking na, sinell short pa nung beteranong mga mang-iipit
10M shares at 0.85 = P850k
ending: wipeout ang 100k original investment, me utang pa 50k kailangan i-settle sa broker
lesson: pag baguhan, wag muna gumamit ng credit facility

perfect ang sagot ni master O natawa ako sa parteng "bumagsak dahil nagprofit taking na, sinell short pa nung beteranong mga mang iipt" Big Grin



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#10
For me, T+3 is similar to betting on NBA odds or other sports that will not require you a capital at first. As long as your broker can give you a good credit line, there's a tendency to abuse it. More experienced players can manage this well but for starters, it's like betting by chance. Stock trading or investing requires patience and the 3 day allowance is too short especially on our market where the flucs are too small. You can lose huge amount without you even realizing it.

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