$25,000 Minimum

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YoungOne

Hello,

I was wondering if someone could clarify the $25,000 minimum for day trading. I was wondering if this is for margin accounts only? For example, I have lets say $5,000 and I am going to day trade with that and use no margin. Do I have to follow the no more than 4 trades in 5 consecutive days even though I am not using margin?

Thanks in advance.
 
In a cash account you probably need to wait for a trade to settle before using the proceeds to trade again. So, it could be difficult to daytrade.
 
Thanks for the link.

So let's say I have $5,000 and I buy a stock that is $5 and I buy 1,000 shares. I then sell the same stock for $7 on the same day. So now I have $7,000, I can't use the $7,000 the next day to buy some other stock and just keep on doing this day after day?
 
Quote from YoungOne:

Thanks for the link.

So let's say I have $5,000 and I buy a stock that is $5 and I buy 1,000 shares. I then sell the same stock for $7 on the same day. So now I have $7,000, I can't use the $7,000 the next day to buy some other stock and just keep on doing this day after day?
More...

You need to diversify, risk only a small percent of capital on each trade, if you will risk 100% on a trade you will lose 100% if your trade goes bad.
 
Quote from YoungOne:

Thanks for the link.

So let's say I have $5,000 and I buy a stock that is $5 and I buy 1,000 shares. I then sell the same stock for $7 on the same day. So now I have $7,000, I can't use the $7,000 the next day to buy some other stock and just keep on doing this day after day?
More...

try this example:

So let's say I have $5,000 and I buy a stock that is $5 and I buy 1,000 shares. I then sell the same stock for $5.05 on the same day. So now I have $5,050, I can't use the $5,050 the next day to buy some other stock and just keep on doing this day after day?
 
Quote from elit:

You need to diversify, risk only a small percent of capital on each trade, if you will risk 100% on a trade you will lose 100% if your trade goes bad.
More...

I know, that was just an example.
 
Quote from Tums:

try this example:

So let's say I have $5,000 and I buy a stock that is $5 and I buy 1,000 shares. I then sell the same stock for $5.05 on the same day. So now I have $5,050, I can't use the $5,050 the next day to buy some other stock and just keep on doing this day after day?
More...

You can do this provided it's a margin account. But your broker will eventually flag your account as "pattern day trading" and requires you to keep a $25k minimum balance in the account at all times. So you either have to pony up the cash and take the account balance to $25k or they'll lock your account from trading for certain penalty period.
 
Quote from YoungOne:

Thanks for the link.

So let's say I have $5,000 and I buy a stock that is $5 and I buy 1,000 shares. I then sell the same stock for $7 on the same day. So now I have $7,000, I can't use the $7,000 the next day to buy some other stock and just keep on doing this day after day?
More...

Not in a cash account cause it takes 3 days to settle stock trades. You need a margin account for this.
 
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