Which broker & clearance firm?
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Broker freezes my acct upon wiring out funds to <$25k!!
- Thread starter Option Trader
- Start date
I think at one point I asked a broker when I was shopping around
if I could trade my PDT account if it fell below 25k. They said I could, but it would become a cash account with no margin. In that respect, I may be incorrect about that part of the rule being SEC. The complete freeze may just be IB.
TraderTX, did you still have margin when you reduced your account?
if I could trade my PDT account if it fell below 25k. They said I could, but it would become a cash account with no margin. In that respect, I may be incorrect about that part of the rule being SEC. The complete freeze may just be IB.
TraderTX, did you still have margin when you reduced your account?
Suppose your account used to be $25k or more and in addition a PDT account. If it goes below $25k, you can still be allowed to place a trade--not only just to close the old positions but also to open a new position. You cannot just keep day-trading. If you still do day-trade on any day afterwards while your account being still <$25k, your account will be in 90 days restrictions and is good for closing transactions only. This is still being in compliance. If your broker chooses to have further restrictions, consider it as its own limitations.
Quote from Option Trader:
Which broker & clearance firm?
I used OptionsXpress for equities and options....not the cheapest but liked their options analyzation back then....now my equity account is with TOS and my futures is with Mirus. As far as being below 25K and still trading w/o an account freeze....haven't had trouble with OXP or TOS
PDT rule is the FUCKING NYSE/NASDAQ sec rule. it is unfair to small account holders, the government just put this ban on small accounts, they take excuse to protect small investors, actually they do not want everyone to do day trading business, the hiden reason is those big guys lobbied goverment to set up this rule since they do not want small guys to compete and take away their business, the internet makes everyone traders possible, those big guys saw this as a big threat.
for example, someone in a 5 day sessions already did three day trades, then he opened XXX trade, somehow he found XXX did not perform well, he will face the PDT rule dilema, particularly if his account is under $25k, if he cut loss, "sorry, you are pattern day trader, no more trading at least 90 days", if he did not cut loss, he knew next morning maybe a nightmare, like BSC, over the weekend, gapped down from 30 to 2+, even 100shares, you lost shit, that is not protection, that is a trap.
plus this, the governement set another rule:wash sale. you can not deduct tax over $3000. but the big guys can do that through Mark-market accounting...
eat it and swallow it and live with it...
there is no PDT rule in future trading
for example, someone in a 5 day sessions already did three day trades, then he opened XXX trade, somehow he found XXX did not perform well, he will face the PDT rule dilema, particularly if his account is under $25k, if he cut loss, "sorry, you are pattern day trader, no more trading at least 90 days", if he did not cut loss, he knew next morning maybe a nightmare, like BSC, over the weekend, gapped down from 30 to 2+, even 100shares, you lost shit, that is not protection, that is a trap.
plus this, the governement set another rule:wash sale. you can not deduct tax over $3000. but the big guys can do that through Mark-market accounting...
eat it and swallow it and live with it...
there is no PDT rule in future trading
Quote from trader_david:
PDT rule is the FUCKING NYSE/NASDAQ sec rule. it is unfair to small account holders, the government just put this ban on small accounts, they take excuse to protect small investors, actually they do not want everyone to do day trading business, the hiden reason is those big guys lobbied goverment to set up this rule since they do not want small guys to compete and take away their business, the internet makes everyone traders possible, those big guys saw this as a big threat.
for example, someone in a 5 day sessions already did three day trades, then he opened XXX trade, somehow he found XXX did not perform well, he will face the PDT rule dilema, particularly if his account is under $25k, if he cut loss, "sorry, you are pattern day trader, no more trading at least 90 days", if he did not cut loss, he knew next morning maybe a nightmare, like BSC, over the weekend, gapped down from 30 to 2+, even 100shares, you lost shit, that is not protection, that is a trap.
plus this, the governement set another rule:wash sale. you can not deduct tax over $3000. but the big guys can do that through Mark-market accounting...
eat it and swallow it and live with it...
there is no PDT rule in future trading
Exactly right. I couldn't have said it better.
Quote from Option Trader:
Takes 5 days; also, I don't think it's smart just to give up one's merit unnecessarily. The real question is if IB blundered.
Well obviously they laid the rules out in writing on the website. All your alternatives are covered there. Sounds like if you want to maintain the account, you need to do a reset.
Blunder? I think the rules are clear that if an pattern day trade account falls under $25K it must either be restored to $25K, or be restricted. Otherwise, you are entitled to a reset. These are the rules everywhere, as far as I know. Now, whether everyone enforces them is another question.
I think the enforcement of certain rules pertaining to pattern day trading, and further, to settlement of cash trades, is very uneven amongst the brokerage community. That said, my belief is that the above is how the pattern day trade rule should properly be interpreted.
By the way, restricting or freezing the account doesn't stop you from transferring your money out of the account. In fact, I wonder if you can then open a new account. LOL!
OldTrader
Option Trader, OXPS, TOS, Ameritrade, Izone, etc. are enforcing the rules properly. It is actually IB who is putting the extra limitation. What you are having is IB's limitation--since that is how their system is coded. However, even with other brokers, you will not be able to day-trade stocks if your account is <$25k at US retail brokers. Another IB's limitation is that IB's system also tries to prevent you from opening the 4th position in 5 rolling days even if your account has always been nonPDT with <$25k. Still, IB did not do "blunder" from its point of views since it can do business in its ways and code its system with more restrictions as it sees fit its business model.Quote from Old Trader:
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Quote from Option Trader:
Takes 5 days; also, I don't think it's smart just to give up one's merit unnecessarily. The real question is if IB blundered.
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Well obviously they laid the rules out in writing on the website. All your alternatives are covered there. Sounds like if you want to maintain the account, you need to do a reset.
Blunder? I think the rules are clear that if an pattern day trade account falls under $25K it must either be restored to $25K, or be restricted. Otherwise, you are entitled to a reset. These are the rules everywhere, as far as I know. Now, whether everyone enforces them is another question.
I think the enforcement of certain rules pertaining to pattern day trading, and further, to settlement of cash trades, is very uneven amongst the brokerage community. That said, my belief is that the above is how the pattern day trade rule should properly be interpreted.
By the way, restricting or freezing the account doesn't stop you from transferring your money out of the account. In fact, I wonder if you can then open a new account. LOL!
OldTrader
Quote from GTC:
Option Trader, OXPS, TOS, Ameritrade, Izone, etc. are enforcing the rules properly. It is actually IB who is putting the extra limitation. What you are having is IB's limitation--since that is how their system is coded. However, even with other brokers, you will not be able to day-trade stocks if your account is <$25k at US retail brokers. Another IB's limitation is that IB's system also tries to prevent you from opening the 4th position in 5 rolling days even if your account has always been nonPDT with <$25k. Still, IB did not do "blunder" from its point of views since it can do business in its ways and code its system with more restrictions as it sees fit its business model.
Perhaps IB is putting on an extra limitation, and it is simply a matter of coding. Frankly, it does seem kinda silly to restrict an account simply because a cash withdrawal has reduced the equity below $25K.
However, at the same time I think this pattern day trade rule has plenty of anomalies. I did a search on pattern day trading on the Nasdaq and SEC sites. I couldn't locate anything that covered this, other than the rule that when the equity falls under $25K, the account must be restored to $25K, or it is restricted. And of course, it can be reset.
Do you have some type of link that leads you to believe this is improper under the pattern day trade rules?
OldTrader
Quote from rwk:
SEC has no jurisdiction over futures or forex. That could change with Paulson's latest proposal that includes merging the SEC and the CFTC. That scares me. A few years ago the SEC chairman at the time commented that he saw no reason futures should be allowed more leverage than securities.
thankfully it's just talk right now and any of these changes would likely take years if they do go through but yeah, I don't like to hear that stuff either.