posted
Is it true that with a cash account there are no restrictions on the number of day trades that can be done. Also most brokerages require upto 3 business days to settle funds. Are there any which settle your funds the next day? I was thinking of ways to get around the day trading rules ( 3 day trades in a rolling 5 day period).
If I have 10,000 in my account and do 5 day trades of 2000 each everyday and can get my funds settled the next day then I should be fine, correct?
Posts: 210 | From: tampa, fl, us | Registered: Nov 2004
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TampaInvester--- "daytrader" definitions (or interpretations) may vary slightly from brokerage to brokerage, but here is general SEC info (within this text are links you can't see here- so go to investopedia link for more).... http://www.investopedia.com/ask/answers/164.asp As of Sept 28, 2001, the NASD and NYSE amended their definitions of day traders. A new term that they use is "pattern day trader". An investor can be classified as a pattern day trader by having one of the two following characteristics:
1. He or she trades four or more times during a five-day span, OR 2. The firm where the investor is making transactions, or opening up a new account, reasonably considers him or her a day trader.
Once an investor is considered a day trader, the brokerage must classify him or her as such, and the investor is then subject to increased equity requirements. Mainly, the brokerage must require a minimum equity of $25,000 at the beginning of the customer's trading day. This minimum equity requirement has been introduced by the Securities & Exchange Commission and the NYSE. Ensuring that any substantial losses can be offset by the day trader's own equity, the requirement addresses the inherent risk imposed on brokerages by leveraged day trading activities.
A more restrictive margin rule has also been implemented. Day traders are permitted to purchase only four times their maintenance margin levels. If this level is exceeded, the firm must issue a margin call to the day trader who subsequently has five business days to deposit the funds before the account is halted from additional trading.
For further information, see our articles Defining Active Trading and Day Trading: An Introduction.
Posts: 229 | From: new mexico | Registered: Apr 2005
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oh, also-- i don't think you can get earlier settlement than the 3-day rule. if you have no margin acct and your cash is tapped out, most brokers make you wait, tho some overlook it if you're not too outrageous or trading too much... actually (my opinion) 3-day rule is a good thing... EXAMPLE: late last spring, some knothead entered the wrong data into their NASDAQ feed, causing a huge number of stocks to be incorrectly listed at many times above or below their real value--- and on a FRIDAY!!! there was sheer trading chaos for several hours... by monday the nazz said they were canceling all trades on the misquotes and giving everybody their shares and cash back, pursuant to the 3-day rule...
Posts: 229 | From: new mexico | Registered: Apr 2005
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posted
Thanks guys for all the suggestions. I already have accounts with choicetrade and scottrade and am thinking of getting a 3rd one with ameritrade. all accounts are margin accounts. Since the rules are person specific and not account apecific I can day trade with one account everyday. I also heard of another brokerage called otcsecurities.com. It seems like they somehow not enforce the day trading restrictions. not sure how they manage to do that...need to check them out
Posts: 210 | From: tampa, fl, us | Registered: Nov 2004
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woh! the site seems to have changed overnight from what I saw last time. They now are some french tech support site..looks like to be a scam. I'll wait and see what it changes to on monday lol..it was recomended to me by someone on another stocks chat site
Posts: 210 | From: tampa, fl, us | Registered: Nov 2004
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Iv'e never waited 3 days for my account to be settled through Choicetrade.. but that is just my experience.. do not know about other people's experiences as in regards to this topic in Choicetrade...
Posts: 4669 | Registered: Mar 2004
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My experience with choicerade is the same as Mach...'s. When I make a sale with lowtrades, I have the money to trade the next day.
I use both brokerages with cash only accounts and I'd not be surprised to look through the records and discover that I do more than 4 day-trades in each in any given 5 day period.
Posts: 11304 | From: Fort Worth, Texas | Registered: Mar 2005
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I wondering about Choicetrade, wow they are really cheap on fees. It is the same software that I use now .
I was wondering Mach and any others do you trade OTCs, $1.00, etc. or just stocks over $5.00.
The reason that I am asking is that I use RML trading ($9.95 per trade ouch) and I was daytrading with under 25k for a month but now it is T+3.
It is interesting because I have heard of others daytrading with Choicetrade and Lowtrades but they use Penson Financial the same clearinghouse as RML does????
Mach, bdgee or anyone else use choicetrade been flagged as a Pattern Day Trader.
Thanks for any help guys this is a real pain... by the way this is a great stock board .
Posts: 8 | Registered: Oct 2005
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I usually trade in the $1-$3 range.. sometimes below $1... but I don't daytrade because i dont have the time for it so.. i swing or position trade which is more practical for me though sometimes i dabble in daytrading or if a trade goes against me badly ill sell same day..
-------------------- Let the world change you... And you can change the world.
Ernesto "Che" Guevara de la Serna Posts: 4669 | Registered: Mar 2004
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Ok, but does that mean 1 trade equals an in and an out (buy and sell) or 3 trades total like 2 buys and 1 sell in a 5 day period?
Posts: 725 | From: litte rock AR | Registered: Oct 2005
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I'm asking because on one account, I bought on Friday, bought something else on Monday, and sold Fridays on Tuesday. Is that my limit (3 trades) until Friday?
Posts: 725 | From: litte rock AR | Registered: Oct 2005
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greenman, the point in question is "roundtrips": buy stock A today, sell stock A later today; do that too often and you'll be labeled a "pattern day-trader." Rules are rules (3rt/5days, eg), but the simplest is to study your broker's agreement and then if you still have questions...ask your broker--but not the local guys. Ask compliance dept.
posted
TY for your answer, Buy. So I guess I am safe, but I will call my broker tomorrow........hmmm, what shall I buy now......
Posts: 725 | From: litte rock AR | Registered: Oct 2005
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Fwiw I have seen tons of post from traders having a problem with the brokerage firms now enforcing the PDT i.e. pattern day trader with accounts under 25k.
What I havent seen and maybe this will be of help to some is that you can trade options and the settlement is T+1.
So I switched over to trading options and can trade 3 times a week instead of once.
Posts: 8 | Registered: Oct 2005
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Fwiw according to Penson Financial Services or penson.com which is one of the biggest clearing firms that sometime in 2005 that the security industry is supposed to change to T+1 from the current T+3 settlement.
I am not holding my breath waiting but thought that I would post what I had found on their website.
Posts: 8 | Registered: Oct 2005
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