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Don't attempt to build positions intraday at Tradestation
- Thread starter wjk
- Start date
Quote from jprad:
If that's their policy then how is that I've done 75 daytrades on one stock the past 4 days?
Perhaps you missed the part of my post that said "small account". The mere fact that I was discussing the PDT interpretation by TS in a small account should have been a dead give away I was talking about a NON daytrading account.
But on the other hand, a small account for some is probably 6 figures or more. Point taken.
Edit: I haven't had a daytrading account with TS since 2004. I give that business to IB. It cost less, bracketing can be done with different sizes in the same order after entry, and many other advantages over TS. My order fills always seemed faster with IB, too.
Quote from wjk:
Perhaps you missed the part of my post that said "small account". The mere fact that I was discussing the PDT interpretation by TS in a small account should have been a dead give away I was talking about a NON daytrading account.
But on the other hand, a small account for some is probably 6 figures or more. Point taken.
Sorry, but TradeStation's right, it's you who's completely confused.
If you make three separate buys and sell them all at once then you've executed three trades because each purchase is recorded as a separate lot.
Second, it's not the number of trades in a single day that matters. The rule comes into effect when you do 4 or more round-trips over a 5 day period.
If you still think you're right, fine. But, you may want to look up the text of the rule at the SEC & FINRA sites as well as the NYSE and NASD implementations of those rules, which all brokers, not just TradeStation have to follow if they want to be able to trade their securities.
Quote from jprad:
Sorry, but TradeStation's right, it's you who's completely confused.
If you make three separate buys and sell them all at once then you've executed three trades because each purchase is recorded as a separate lot.
Second, it's not the number of trades in a single day that matters. The rule comes into effect when you do 4 or more round-trips over a 5 day period.
If you still think you're right, fine. But, you may want to look up the text of the rule at the SEC & FINRA sites as well as the NYSE and NASD implementations of those rules, which all brokers, not just TradeStation have to follow if they want to be able to trade their securities.
I am well aware of the rules. I have been daytrading for 5 years.
I won't dispute the exit being counted as 3 trades for three entries. I know for a fact that various brokers treat it differently, based on their interpretation of the rule. My point is that TS will not let me establish more than 3 positions (the 4rth being considered as the fourth trade potential). In other words, they treat each entry as if it will be a day trade, even though there has been no exit. There is no daytrade if there is no entry and exit in the same day in that stock, as you know.
An entry into a position at TS in a non daytrading account is treated as a daytrade for the purpose of that day. If you do not exit and use an actual daytrade, the next day you still have 3 daytrades available (providing none have been used in the previous 5 days), or in the case of TS, three entries available.
I tried to enter 1 stock twice, and another once. I had 1 daytrade in the books. I was not allowed the 3rd entry(even though I closed no positions today). Do you follow me ? It can be different stocks, doesn't matter.
I should be able to enter as many times as I like, providing I don't exit in that day. That is my point. That is not permitted at TS in a non PDT account.
If I'm wrong, feel free to link me to the part of the PDT rules that state I am limited to the number of entries when I am not exiting those same positions in the same day and I'll stand corrected.
Of course TS, as any other broker, can do whatever they want, so I suppose it's a mute point.
Quote from wjk:
I am well aware of the rules. I have been daytrading for 5 years.
I won't dispute the exit being counted as 3 trades for three entries. I know for a fact that various brokers treat it differently, based on their interpretation of the rule. My point is that TS will not let me establish more than 3 positions (the 4rth being considered as the fourth trade potential). In other words, they treat each entry as if it will be a day trade, even though there has been no exit. There is no daytrade if there is no entry and exit in the same day in that stock, as you know.
An entry into a position at TS in a non daytrading account is treated as a daytrade for the purpose of that day. If you do not exit and use an actual daytrade, the next day you still have 3 daytrades available, or in the case of TS, three entries available.
Not true. Any purchases made over the previous 4 days will count if you don't sell prior to the next buy.
Here's the exact text of the rule:
FINRA (NASD) Rule 2520. Day Trading Margin Requirements
Day Trading
(i) The term âday tradingâ means the purchasing and selling or the selling and purchasing of the same security on the same day in a margin account except for:
a. a long security position held overnight and sold the next day prior to any new purchase of the same security, or
b. a short security position held overnight and purchased the next day prior to any new sale of the same security.
Quote from jprad:
Not true. Any purchases made over the previous 4 days will count if you don't sell prior to the next buy.
Here's the exact text of the rule:
FINRA (NASD) Rule 2520. Day Trading Margin Requirements
Day Trading
(i) The term âday tradingâ means the purchasing and selling or the selling and purchasing of the same security on the same day in a margin account except for:
a. a long security position held overnight and sold the next day prior to any new purchase of the same security, or
b. a short security position held overnight and purchased the next day prior to any new sale of the same security.
Purchasing and selling of the same security on the same day. The purchase itself does not constitute a daytrade without the sale. Or does it? I don't believe so.
They are only letting me purchase 3 in the same day when there is no selling. But the next day I can make the purchases again (without selling).
If the purchase itself constitutes a daytrade, why don't they simply state, purchasing or selling, then followed by the exceptions?
One daytrade = the opening AND closing of the same position on the SAME DAY. It takes 4 daytrades in 5 business days to get you labelled a PDT--overnight trades do not count. Just opening a position is NOT a daytrade...however, brokers can make their own rules as strict as they like, which apparently TS has done.
Quote from LongArm:
One daytrade = the opening AND closing of the same position on the SAME DAY. It takes 4 daytrades in 5 business days to get you labelled a PDT--overnight trades do not count. Just opening a position is NOT a daytrade...however, brokers can make their own rules as strict as they like, which apparently TS has done.
That's always been my understanding on the day trades. The wording is interesting in the exceptions, though.
I guess I forget that TS is used by a lot of automated traders. The rule they have for entry probably keeps the automated plays from breaking the rules in small non PDT accounts.
Quote from jprad:
a. a long security position held overnight and sold the next day prior to any new purchase of the same security
I believe the wording of this to mean that if you sell and then add to your position after, it is not a daytrade, but if you add to your postion, then sell, it is a daytrade. I have asked several brokers about this in the past, as I wondered if my exit being only the size of the position entered the previous day would still constitute a daytrade if I had added to that position current day prior to selling previous day's size. Yes, it still is a daytrade in that situation.
Selling, then adding, is not, as indicated in the exception.
Quote from wjk:
I believe the wording of this to mean that if you sell and then add to your position after, it is not a daytrade, but if you add to your postion, then sell, it is a daytrade. I have asked several brokers about this in the past, as I wondered if my exit being only the size of the position entered the previous day would still constitute a daytrade if I had added to that position current day prior to selling previous day's size. Yes, it still is a daytrade in that situation.
Selling, then adding, is not, as indicated in the exception.
The key word is "position," all lots of the same security.
In other words, you have to go completely flat in a given stock before making another purchase in order to make the previous day's buys not count against the PDT count.