ATTENTION: Ever affected by PDT Rule please contact me to join lawsuit and petition FINRA
- Thread starter iceman1
- Start date
There is a lot of bad info on this thread. The PDT rule does not apply to cash accounts. Also, if one has a position on or several, the PDT does NOT prohibit you from closing trades. In fact, if you exceed the 3 trade max, you will get a notice that says "closing only" meaning you can close all the trades you want. Someone was trying to make the case that you were forced to hold on to a risky trade because they would not allow you to close it. That's FALSE.
That makes more sense, but if anything then, the settlement rules seem pretty archaic, in the day and age of electronic trading why do trades reqquire three days to settle?
Max, most stocks settle in one day. The rule allows for "up to 3 days" for settlement. In most cases it happens the following day.
Well thx to both you and sss12, i guess i dont understand this much cause its never had an effect on me, but given the fact i got screwed by regulations once, i tend to want to lean on the side of less regulations........ but i say that as one of the guys who made it not one of the ones who didnt, so i guess there is obviously different perspectives on all this.
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Max, it's not a regulation thing. Look, I'm a libertarian on these things, you know that. If you want to do lines of blow off your hookers ass while shooting up heroin inbetween your toes, I say go for it. It's your money, your body. THIS is not that. You are talking about using "other people's money" to do what you want to do. That is not a right, but a privilege. The same goes for portfolio margin accounts. You are not "enititled" to risk based haircuts. That is also a privilege. If you are willing to use only your money, you can trade, f*ck, snort, or smoke whatever the hell you want.
You just made me smile.
Why? They don't lose money when someone goes broke. They make money off of commissions and holding the money. Pretty sure Robinhood doesn't have many large accounts. I would at least think not.
Saving peoples ass from going bust.... thats their choice. They'll learn real soon trading is not for them.
Mav Mav Mav..., in this case that argument does not hold water.
A person with a 20K account has margin; $80K on marginable securities.
In fact... all the way down to $2K... a person has a margin account.
And its a hell of a lot riskier for a firm to give someone margin overnight than it is intraday. Big gaps can be handled intra-day and an account liquidated live. You can't do that overnight when a stock gaps down huge. Besides, they have so much risk management in place that applies to individual stocks that odds are they won't let someone buy a high risk stock on margin.... be it a huge account or a small account.
There is absolutely no difference risk-wise between what an account with 7K can do and an account with 50K can do. The risk incurred is exactly the same. They both are using OPM. The ability to open and close a position in a two minute time-frame poses absolutely zero increased risk. One could argue the risk is less for the smaller sum. Limiting a sub-25K account to only 3 round trips in a week is silly and has no basis in risk. Since they both are using margin, that is not a valid argument.
Further... in a cash account... the individual can not short a stock, they can only go long. Shorting stocks in a non-margin account is prohibited. Someone with a 24.9K cash account can't short 1 share of TSLA. How fair is that?
So all of the above arguments are weak.
Sorry Mav.
(...here it comes... brace for impact Zany)
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I agree instead of discriminating against traders who are less capitalized and denying them the chance to trade, if the intention is really for protecting brokers not to go under, then reducing or not offering leverage is a much more effective way and makes much more sense.