Pattern Day Trader Rule

NASD & SEC rules apply to anyone who buys and sells a particular security in the same trading day (day trades). You may do 3 round-trip trades in a five-trading day period, If you do a 4th round-trip trade in the five-trading day period, you've violated the rule and your account may be suspended with or without notice for a period of time.

For more information see: http://www.patterndaytraderrule.com/

[Ciao]

I have been around the Forum to read different threads regarding trading and seatlement
Seen this one (thanks for link FP) explaining it, I can see why I couldn’t understand why mine didn’t coincise with some of the questions asked on threads

The pattern day trader rule applies to all brokers in the United States who are NASD members. There may be foreign brokers who are not directly regulated by NASD and offer pattern day trading to clients with less than $25,000 in their account.

over here one can trade as he like regardless the money on the acc.(obviously more money one got better condition he gets)
I could trade endless time a day (with the same money)as long as one is sold before the other is bought, don't have to wait the 3 day rule, but remain on a the day limit.
as an example
few month ago I did a lot trades and I use mu limit €200K, so I couldn't do any further trading, but I got to increase my limit to €500K.

I didn't know about all those rule in the USA markets
I will think about that before opening an USA acc.

[BadThad]

Originally Posted by fireopal

NASD & SEC rules apply to anyone who buys and sells a particular security in the same trading day (day trades). You may do 3 round-trip trades in a five-trading day period, If you do a 4th round-trip trade in the five-trading day period, you've violated the rule and your account may be suspended with or without notice for a period of time.

For more information see: http://www.patterndaytraderrule.com/

Unless you have more than $25,000 in the account.

[Kuzami]

Originally Posted by BadThad

Unless you have more than $25,000 in the account.

Is that total equity or just cash on hand?

[BadThad]

Total value of your account.

Originally Posted by BadThad

Unless you have more than $25,000 in the account.

if you are playing with that amount then guess it would be good to keep more in there b/c believe total account value can not drop below 25k at any point, otherwise you violate the rule...

[BadThad]

Originally Posted by fireopal

if you are playing with that amount then guess it would be good to keep more in there b/c believe total account value can not drop below 25k at any point, otherwise you violate the rule...

Good point.....never really thought about that.

[Kuzami]

That's kind of how I was viewing it...thanks for the clarification. And boy, do I know how fast an account balance can fluctuate! I don't think I'll try pushing the daytrading limit until I have a substantial amount over 25k...:cool:

[bugeyebug]

Originally Posted by fireopal

NASD & SEC rules apply to anyone who buys and sells a particular security in the same trading day (day trades). You may do 3 round-trip trades in a five-trading day period, If you do a 4th round-trip trade in the five-trading day period, you've violated the rule and your account may be suspended with or without notice for a period of time.

For more information see: http://www.patterndaytraderrule.com/

Okay, just so I understand this correctly: this rule applies to day trades (buying and selling a stock during the same business day).

If I buy a stock, say, Monday, and sell it Tuesday, this rule does not come into play, right? Or does it?


Cheers,
-Bug

[Kuzami]

Originally Posted by bugeyebug

Okay, just so I understand this correctly: this rule applies to day trades (buying and selling a stock during the same business day).

If I buy a stock, say, Monday, and sell it Tuesday, this rule does not come into play, right? Or does it?


Cheers,
-Bug

Correct, it does not.

Found this info at http://www.interactivebrokers.com/en...?ib_entity=llc


Examples of Day Trades:
-On Monday, 1000 shares of XYZ stock are purchased. Later on that same day, 1000 shares of XYZ stock are sold. This is considered to be a day trade.

-On Wednesday, 1000 shares of XYZ stock are purchased. Later on that same day, 500 shares of XYZ stock are sold. This is considered to be a day trade.

-On Monday, 500 shares of XYZ stock are purchased. Later on that same day, another 500 shares of XYZ are purchased. In after hours trading on Monday, 1000 shares of XYZ are sold. This is considered to be 1-day trade.

-On Monday, 500 shares of XYZ stock are purchased. On Tuesday, another 500 shares of XYZ stock are purchased. Later on Tuesday, 500 shares of XYZ stock are sold. This is considered to be 1-day trade.

-On Thursday, 500 shares of XYZ stock are purchased in pre-market. In after hours trading on Thursday, 200 shares of XYZ stock are sold. This is considered to be a day trade.

-On Monday, customer sells short 10 YXX September 2005 90 calls and simultaneously buys 10 YXX December 2005 95 calls (combination order type). Later on Monday, customer buys back 5 YXX September 2005 90 calls and sells 5 YXX December 2005 95 calls for a profit. This is considered to be 2 day trades (one day trade for each leg of the spread).

-On Thursday, customer buys 500 shares of YXZ stock. Later on Thursday, customer sells 1500 shares of YXZ stock (reversal creates new short position). On Friday, customer purchases 1000 shares of YXZ stock. This would be considered to be 1-day trade.

Non-Day Trade Examples:
-On Monday, 500 shares of XYZ stock are purchased. On Tuesday, another 500 shares of XYZ stock are purchased. On Wednesday, 1000 shares of XYZ stock are sold. None of these are considered to be day trades.

-On Thursday, customer buys 500 shares of YZZ stock. On Friday, customer sells 500 shares of YZZ stock. Later on Friday, customer buys 500 shares of YZZ stock. This is not considered to be a day trade.

-On Friday, 1000 shares of XYZ stock are purchased. On the following Monday, 1000 shares of XYZ stock is sold. This is not considered to be a day trade.