posted
i noticed a lot of new people to the board lately, jumping the oil and gas runs. just wanted to warn those that dont know about nasd restrictions and daytrading. my buddy got flagged when he first started and he was bummin. he warned me about it when i started. this may help someone out their new....
Overview of Pattern Day Trading ("PDT"):
* Day Trade: any trade pair wherein a position in a security (stock, bond or stock option) is increased ("opened") and thereafter decreased ("closed") within the same trading session.
* Pattern Day Trader: someone who effects 4 or more Day Trades within a 5 business day period. A trader who executes more than 4 day trades in this time is deemed to be exhibiting a ‘pattern’ of day trading and is thereafter subject to the PDT restrictions.
* In order to day trade, the account must have at least 25,000 USD in equity, where equity includes cash and stock, but does not include option or warrant value.
* The NYSE regulations state that if an account with less than 25,000 USD is flagged as a day trading account, the account must be frozen to prevent additional trades for a period of 90 days. IB has created algorithms to prevent small accounts from being flagged as day trading accounts, to avoid triggering the 90 day freeze. IB implements this by prohibiting the 4th opening transaction within 5 days if the account has less than 25,000 USD in equity.
Posts: 6397 | Registered: Jan 2006
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posted
happened to me on my bank of america/tdwaterhouse account..you can still sell tho.. labor day my restriction ends... i now have a scottrade account and am a little wiser.
-------------------- Penny stocks are often very volatile, and just as often unpredictable. - Peter Leeds Posts: 254 | From: lawn guy land, new york | Registered: Feb 2006
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posted
So, say someone does have this happen to their account. Could you just open an account with another broker and keep trading? That's what I'm getting from the post above this one, but I just want to be sure.
Posts: 55 | From: Pennsylvania | Registered: Apr 2006
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-------------------- Penny stocks are often very volatile, and just as often unpredictable. - Peter Leeds Posts: 254 | From: lawn guy land, new york | Registered: Feb 2006
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posted
can you just cash out the account and start a new one? That would make me feel better since I want to leave money-hungry eTrade but think it'll take too much work. That would force me.. better get trading! hah
Posts: 200 | From: Rhode Island | Registered: Mar 2006
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posted
its my understanding the pattern day trader moves with you to different accounts. i received the label thru schwab, but asked them to remove it. they did, but only will do it once. they told me if i opened an account with another broker when i had the day trader status, i would still have it on the other account.
Posts: 515 | Registered: Mar 2005
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posted
So what you are saying is I can only make three round trip trades, a trade in which I buy and sell a stock in the same day, in a 5 day period? Not each week, but each 5 day period. But if I reach 25,000 in my account I can have as many round trips as I choose?
-------------------- Thanks Matto. Thanks Juice. Posts: 2945 | From: USA | Registered: Feb 2006
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Secondly, if you if are flaggeed at Ameritrade for example, and you move to Etrade, IT WILL NOT FOLLOW YOU. Brokers don't keep track of that stuff nor relay it over.
Third, if you happen to get flagged, call them and ask them to remove it. I've been flagged twice and had it removed. If you are flagged every few months or so, they may remove it. Just say you weren't aware of the rules and that you won't do it again. Trust me, it works.
Fourth, it used to be that you could open a new account with the SAME brokerage and not be labeled anymore. You can still try this and see what happens. Obviously, if they tag by SS#, you're screwed unless you open a joint with someone else and use their Social.
Plenty of ways around it.
-------------------- Stick with Repo's plan in '07 - FRPT/DKAM! Posts: 6379 | From: PA | Registered: Dec 2004
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posted
So with 25,000 I can literally buy and sell stock ABC 10 times a day if I want. Is that SEC reg or depending on your broker? Also does anyone use Scottrade Elite? If so what advantage does that give you over regular Scottrade account?
-------------------- Thanks Matto. Thanks Juice. Posts: 2945 | From: USA | Registered: Feb 2006
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posted
Whats the SEC's purpose of freezing an account if its under 25,000 dollars while allowing unlimited daytrades in an account over 25,000?
Posts: 565 | From: War Eagle | Registered: Jun 2005
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posted
ostensibly, the big buy-in protects peeps trading with egg n butter money. Opening and closing multiple positions in a day can wipe you out pretty quick. Margin and call requirements on PDT accounts protect the broker...
posted
How do you you know you are flagged as a day trader if you have more than 25k in your account? I heard that once you are a day trader, you are taxed 50% instead or the normal rate. Is that True?
Posts: 200 | Registered: Mar 2005
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posted
eTrade did flag me and said they require 25k in 5 days or futher restrictions.... Due to this thread I asked them to remove the flag and told them I promise to never ever do it again. Then I Slapped my own hand. Was told my request will be forwarded to the margins dept who will review my request within 72 hour and will maybe remove it.....
Thank you Catus33, Repoman75, and all the others for this very valuable info. YIKES
Posts: 551 | From: FL | Registered: Apr 2006
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posted
I haven't found etrade to be very helpful... Since the middle of January I have given them nearly 6k in commission and they put a "restirction" on my account...called them several times...sent emails...all kinds of stuff...no help...they claim that I "traded" with unsettled funds...I was always very careful...(I do not have a margin account and I only have 22k in that account)...and showed them precisely what I had done...the "people" on the phone agreed that I hadn't...they forwarded it to some one...I don't know who...but that was 10 days ago...I have called back daily and have been told they would get back to me...they never have...but it is their loss..I have been cashing out of all of my positions with them and transferring to a new broker(choicetrade)...where the fees are half...so all though it is a pain at the moment...I will most defintely be saving money in the long run...
Good luck...but etrade will probably just ask you to get a margin account and all will be good...I refuse to...I did get it with choicetrade...
-------------------- #1 Rule: Protect your capital! #2 Rule: Never fall for the BS on the boards! Posts: 8890 | Registered: Jan 2006
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posted
This is bullsht because with etrade they dont give you margin purchasing power to buy OTC stox...only big board stocks. The only thing the margin account does is elimate the 3 day settlement period, so it doesnt protect the broker from anything. This is outrageous. If my account is frozen im gonna be extremely pissed.
-------------------- *I'm not a financial expert or advisor, everything stated is my opinion* Posts: 1680 | From: NC | Registered: Jan 2006
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