When Goldman left, we left...most traders prefer to trade from home, avoid coming into the city, and we sure didn't want to get stuck with that high overhead (it was OK when GS was paying for it, LOL).
Don
Coughing up the $25k requirement for Pattern Day Trading
- Thread starter AeroKen83
- Start date
When Goldman left, we left...most traders prefer to trade from home, avoid coming into the city, and we sure didn't want to get stuck with that high overhead (it was OK when GS was paying for it, LOL).
Don
Chewbaba is such a cute name!
Stacy
Stacy
Actually you need more than 25k cause' on your first trade ,you know the first one always loses, then your under...
Stock brokers are losing the most money on the PDT deal (even thought some of them like it). Futures brokers, on the other hand, have seen their business explode since the creation of PDT. It really isn't a good rule. If the government were so concerned about "the little guy" losing his shirt, they would apply a PDT type rule to futures. This is just bad politics. I've always hated the PDT rule. I hated when I didn't have 25K, and I hate it now because it prevents what I call 'easy money' from playing the market.
The real solution to reducing risk for smaller accounts is to cut margin. A guy with 2k should be able to trade all day long, a thousand trades a day, but he should it no margin - theatrically speaking. That is to say he would only be trading 2k worth of product even though it would still be margin due to clearing rules, which, by the way, are also in dire need of a change. But hell, they're still trading in the PITS in Chicago; the whole damn business needs to get with the times.
PDT is not a good rule. It was a political play that needs to be changed (think farm subsidies). Don't even bother saying it's there to protect the little guy. He can in much deeper trouble, much quicker in any other non-PDT market: futures, forex, ect...
The real solution to reducing risk for smaller accounts is to cut margin. A guy with 2k should be able to trade all day long, a thousand trades a day, but he should it no margin - theatrically speaking. That is to say he would only be trading 2k worth of product even though it would still be margin due to clearing rules, which, by the way, are also in dire need of a change. But hell, they're still trading in the PITS in Chicago; the whole damn business needs to get with the times.
PDT is not a good rule. It was a political play that needs to be changed (think farm subsidies). Don't even bother saying it's there to protect the little guy. He can in much deeper trouble, much quicker in any other non-PDT market: futures, forex, ect...
you are 100% correct ANCOR, PDT is a flaw within the free market capitalist system of stocks. why should there be a rule that correlates your a/c size to which way you can invest in stocks? it is not a 100% free market. if 18year old billy wants to buy and sell IBM all day long in $2000 parcels, he should be able too -> not stimulated to participate in the futures and forex markets where as everyone knows there is a lot more risk. Intraday trading and not holding positions overnight actually has less risk, but the clowns at SEC don't seem to think so. PDT should be overturned to give the average man the same investing rights as a rich man and create a truely free market. PDT could be seen as a scam to try and make a willing day trader bring more to the table than he has too, stretching his limits, knowing the physological and financial pain will be greater than if he risked $5000.
the PDT rule equivelent in real estate would be; you may NOT buy and sell houses of <$250K in value more than 3 times per year. you won't ever see this rule.
Because it is stockmarket specific i think there is a little more to it than the public has been informed.
the PDT rule equivelent in real estate would be; you may NOT buy and sell houses of <$250K in value more than 3 times per year. you won't ever see this rule.
Because it is stockmarket specific i think there is a little more to it than the public has been informed.
Just a comment:
The reason most business ventures fail is (obviously) lack of capital...and trading is no exception. Both in the amount at risk and the amount that can be used. To use a retail example: You can make 200% on $2,000 and have a tough time on $4K per year. You can use $100K with $5,000 risk capital and have a bad week or month and the $5K COULD get eaten up during that period.
Adequate funding on both sides of the equation is crucial to an overall successful business. In my 3 decades of experience, I've noticed that somewhere in the $10K-$20K range allows for enough "wiggle room" - and that you still need $500K or more to make $100K or more per year (approx, of course there are exceptions).
It boils down to a feasible trading plan, just think like you were going to a bank to borrow $$ to start a "widget" business....then design your trading plan around that example...enough capital, a good projection, a good daily plan, goals and risk control.
And, yes, the futures allow a great number of people to trade with small capital, and yet it seems that the CME makes most of the money. Hard to compete with the floor traders who pay less than $1.00 Round turn for eMini's (I pay many times that myself).
Anyway, just food for thought....good trading everyone...
Don
The reason most business ventures fail is (obviously) lack of capital...and trading is no exception. Both in the amount at risk and the amount that can be used. To use a retail example: You can make 200% on $2,000 and have a tough time on $4K per year. You can use $100K with $5,000 risk capital and have a bad week or month and the $5K COULD get eaten up during that period.
Adequate funding on both sides of the equation is crucial to an overall successful business. In my 3 decades of experience, I've noticed that somewhere in the $10K-$20K range allows for enough "wiggle room" - and that you still need $500K or more to make $100K or more per year (approx, of course there are exceptions).
It boils down to a feasible trading plan, just think like you were going to a bank to borrow $$ to start a "widget" business....then design your trading plan around that example...enough capital, a good projection, a good daily plan, goals and risk control.
And, yes, the futures allow a great number of people to trade with small capital, and yet it seems that the CME makes most of the money. Hard to compete with the floor traders who pay less than $1.00 Round turn for eMini's (I pay many times that myself).
Anyway, just food for thought....good trading everyone...
Don
Wasn't the justification that the PDT rule would reduce volatility?
Back 8 years ago "they" cracked me up (regulators)..in trying to "crack down" on retail day traders they implemented the $25K PDT, but also gave 4 times margin allowances...a bit of a contradiction it seemed to me at the time.
It did cut down on the "masses" getting involved chasing every new Naz stock and Internet stock with $500 in their accounts... but overall I don't see a negative effect.
We actually "debated" on stage with the people from the NASAA (right here in Vegas)...and when my brother actually agreed with the 30 minute lecture stating that the "public should not day trade" - Bob said "daytrading should be left to the professionals, of course" -- but then added, "but this still America, right?"
When they implemented the Series 7 requirement, we noticed a big improvement in the quality and seriousness of our new traders....before that, almost everyone in the Country thought they would "try stocktrading" as if it were "Hey, let's try Real Estate on the weekends" LOL....Success rates went up quite a bit.
Now that things have gone back to "normal" (in the markets, volatility, etc.)...the caliber of trader is holding up better than in the 90's....more sophistication, even from the casual, part time trader, I've noticed.
Anyway, just another couple of cents worth...
Don
Wasn't the integrity of the markets as an investment being challenged.
At the time of the PDT rule and its introduction, there was an increasing "Public" involvement in the "DayTrading Craze". Many folks gambled away their life savings, thus complaining to their congressman that they were drawn into the markets by this wave.
As politicians react and as always making the wrong choices, but they did stop undercapitalized day traders from getting into the "craze''. I will give them that....
Michael B.
At the time of the PDT rule and its introduction, there was an increasing "Public" involvement in the "DayTrading Craze". Many folks gambled away their life savings, thus complaining to their congressman that they were drawn into the markets by this wave.
As politicians react and as always making the wrong choices, but they did stop undercapitalized day traders from getting into the "craze''. I will give them that....
Michael B.
I agree, but since we have never been part of a "craze" we fought hard to keep the distinction of "professional" trader (as exchange members, of course)...and "they" had to come up with a way to make that distinction...and they said "Series 7" - no problem, we were relieved actually that more wasn't involved.
Don