$25,000 minimum for daytrading needs to be changed

daytrading or trading is how market makers make money for being a market maker
market makers are obligated to put a bid and ask.

now these market makers like goldman sachs own the market and make the rules

knight trading, goldman sachs are market makers just recently they are complaining about HFT machines or flash trader making money off their market making business.
these daytraders are like making millions off them. yeah these market makers know who is making and losing money in their 'book'

for the pdt to change you'll need the market makers to change it.

the reason teh es futures is the mostly volume in the cme by $$$ and volume is all the daytraders that used to daytrade stocks now daytrade the ES..the volume in the ES in 2000 is less than 5% of current volume. very few retail traders traded teh ES in the late 90's

the ES is way harder to daytrader than the spy or QQQQ



Quote from Nostradamus357:

I'd like to get a discussion here about the recently passed (2001) legislation restricting those with less than $25,000 from pattern daytrading.

It's in my opinion that an adjustment at the least should be made where a waiver or maybe even a test of sorts could be administered in place of this *all-inclusive* rule.

My argument is based on the fact that these markets can have alot of chop to them which is induced by several reasons including high FT for which the majority comes from prop and other institutional firms. If you ask me, it's almost a perfect circle for proprietary businesses in that I believe it has a great affect on their churn and burn business models. My focus here, however, isn't on hft as there are many reasons for choppy markets, but they do have an influence.

If I place a trade with an intention of holding for a longer period than a day, and the market turns against me, naturally I'm going to want to minimize a loss so I will close out to avoid. This doesn't mean that I wouldn't want to get in again that same day which I will do once it appears settled, but now, I have a *daytrade* racked up on the 5 day period.

With the ultra-low commissions nowadays and the changed landscape from the late 90s, this regulation doesn't protect me as it originally was intended and makes it difficult to trade responsibly.

Does anyone else feel this way, and is there a possibility that this could get amended?
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FINRA's explanation for the PDT rule was that sufficient levels of equity are needed to support the risk of day trading. I have no problem with that and in return, I appreciate the 4:1 intraday that it offers.
 
Quote from spindr0:

FINRA's explanation for the PDT rule was that sufficient levels of equity are needed to support the risk of day trading.
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And how is it more risky to hold stocks or options for one day as compared to overnight? I would think overnight is more risky because of gaps.
 
The rule is basically dumb if you're in the industry.

The more people involved the better in all aspects...

Volume, price discovery, commissions, fees, more jobs, more revenue at discount brokerages, etc etc etc..

its just dumb.



I would assume there are very few lobbyists that care about getting gubmint to repeal it. Mainly the big boys on wall street don't really care.

The discount brokerages are the only beneficiary's and i guess they aren't that powerful in Washington.
 
Quote from ForexForex:

I don't see how the discount brokerages benefit from the PDT rule. You make 4 day trades within a week and your account is suspended for 90 days. They lose 90 days worth of commissions, unless the account holder tops off the account to $25,000.


I wonder what IB thinks of the PDT rule?
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What I meant was the discount brokerages would be the beneficiary's of a repeal of the ban.
 
Quote from ChkitOut:

The discount brokerages are the only beneficiary's and i guess they aren't that powerful in Washington.
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Quote from ForexForex:

I don't see how the discount brokerages benefit from the PDT rule. You make 4 day trades within a week and your account is suspended for 90 days. They lose 90 days worth of commissions, unless the account holder tops off the account to $25,000.


I wonder what IB thinks of the PDT rule?
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ChkitOut is saying discount brokerages are the only beneficiaries of repealing the pattern daytrading rule.
 
This isn't even about daytrading. You can't do ANYTHING on 4 round trips a week. Swing trade with stops? Forget about it. Unless your account is $100.

A 20k account and 4 day trades a week? Get real. SEC needs a wake up call.
 
Just face it. The markets are not free. To get around the PDT rule venture on over to the futures markets. No minimum account balances needed over there.....yet.
 
Quote from Jackshark:

Yes, the PDT needs to be raised. It's has saved much heartache and loss from the gambler class. If you don't gave the chips stay out of the game.
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America was supposed to be all about <b>freedom</B>, remember?

<i>"Freedom is not worth having if it does not connote freedom to err."</i> ~Gandhi
 
This rule flourish the prop shop/trading firm capital outfit...not to mention it is done nothing to protect day trader but drove them to prop shop and the majority lose money because prop shop by design --majority --does not favor trader.

Here is typical prop shop setup:

-5K risk deposit
-Software fee, commission.
-No Holding overnight
-Trading with 100 share lot minimum
- Split Profit

With this arrangement a few bad trade and you are out of the game.

Without 25k requirement for PDT the same trader might have a chance with retail brokerage.

- Share size to position -- retail trader can do odd lot-- trading less then 100
- Holding overnight or long term trade is possible avoiding the intraday volatility.
- Last but not least. Protection against Fraud!

So Mr. Regulator please repeal this law!
 
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