New Users Beware! Moomoo's duplicitous "margin only" reality!
Especially the new folks, I recommend taking a second to read-up on the limitations Moomoo creates deeming all users to have margin accounts (while obfuscating this fact).
I learned this the hard way and don't want anyone else to fall victim! It is not information you can find without digging. Especially since Moomoo has a cash account option for Papertrade! So it's not an infrastructure issue - it's an intentional choice. This lower-risk account is withheld from users when trading actual funds.
If you are an inexperienced trader or suffer health problems like struggling with addiction, please be careful! This poses all the same risks (and leaves the same bad taste personally) as a scenario such as opening a checking account only to find the bank refuses to offer a debit card and forces you to use a credit card (with a healthy interest rate) if you want to use your money.
Here is why that mattered to me. Despite following FINRA's guidelines, I am now banned for 90 days from making any purchases and my assets are effectively locked in Moomoo unless I want to eat a $75 transfer fee (which could either be per transfer or per stock with how it's written)
I have never once requested margin, used margin or completed any agreement to convert to a margin account. I had a good amount of settled cash this morning I wanted to use for swing trading.
Aware of the Pattern Day Trading designation, before trading, I made sure to check FINRA (the organization Moomoo cites in its PDT help) and their Day Trading page where it states:
"Day trading in a cash account is not permitted. All securities purchased in the cash account must be paid for in full before they are sold. In the cash account, under FINRA rules, purchasing a security, paying for it in full as required by Regulation T, and then selling the same security is not considered a day trade."
It's perfectly reasonable after reading that to think, if you bought stock with settled cash that has never used margin, then you don't have to worry about PDT since they don't count as day trades. This is 100% NOT TRUE.
Even though Moomoo's warning implies they may flag you falsely and they offer a "request to remove PDT" submission, do not take that at face value. By designating ALL accounts as margin, it's virtually impossible for something to be incorrectly flagged as a day trade. It would have to be something completely ridiculous like an error in the code getting the date+time wrong. This makes the removal request a useless feature - the UI design alone makes it pretty clear the result is coming from a few lines of code for conditionals rather than true oversight.
At this point, all I will be using Moomoo for is to liquidate the assets I have left and do an ACH into my account. Maybe I missed some fees on that too, who knows!
The other important takeaway was that there is no benefit to keeping cash in the brokerage. Unless you are on the 8.1% APR promo rate, you can find fintech companies that are paying more than 5.1% APR.
It's really sad for me to have made clear the lack of integrity Moomoo operates with after otherwise enjoying the app so much. This post might even cause retaliation despite being factually accurate - the sky is the limit when you take ethics off the table. My conscience simply wouldn't allow me to stand idle if I had any chance of helping even one person protect themselves.
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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Investing primarily in bio-tech and drug development; both big pharma for growth and start-ups for speculation
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Moomoo Lily : Dear mooer, sorry for your bad experience. Your feedback is very important to us and we have forwarded it to the relevant department. We will continue to optimize and improve the quality of our products and services in the future. Thank you for your support.
Arrayfunction OP : Unfortunate Update: On July 20 2024, Moomoo staff decided (for unclear reasons) to escalate what had been me voluntarily leaving the platform while helping others avoid repeating my mistake to a (albeit brief) attempt at retaliation / extortion.
TL;DR: Moomoo tried to implement cold call debt collection company tactics, including harassment and an implied threat to refuse to allow withdrawal of legally settled cash. Be even more careful.
I will include confirmatory screenshots below. I live in a US state where there is no reasonable expectation of privacy in written correspondence and permission from all parties is not necessary prior to making records. The law may differ wherever Moomoo operates out of and it's not worth the legal hassle if they are removed.
I have not had any personal communication with Moomoo since July 15th 2024 until they made repeated phone calls to me with a VOIP number spoofed to be coming from New Hampshire of all places. I thought it was a simple spam call (as my phone correctly labeled it) but the number immediately called back after rejecting the call. After rejecting the 2nd call, I received an SMS from a number used by Moomoo prior opening with
"Hello! This is moomoo, your stock trading platform. We have been attempting to contact you regarding your withdrawal earlier today. May we proceed with this text message?"
If Moomoo Lily had done as stated, they would have known my account is banned from opening new position
It was at that point I realized they were most likely leaving a veiled threat to seize my funds through claiming the transfer can't be completed successfully. These are all tactics debt collectors use in the US.
I left an open invitation to discuss in written correspondence via SMS or Email. Conversation ceased and the transfer went through.