floating a trial balloon concerning pdtr regulation

We all have to acknowledge the existence of the rules, and work within them or around them, until they are changed.

But I don't share your implicit faith in the infinite wisdom of the rulemakers, and I don't personally need or want their dictation in my life.
 
Quote from hii a_ooiioo_a:

We all have to acknowledge the existence of the rules, and work within them or around them, until they are changed.

But I don't share your implicit faith in the infinite wisdom of the rulemakers, and I don't personally need or want their dictation in my life.
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Fair enough.

nitro
 
i started trading with 2000.00. it was not enough to buy 100 shares of stock, so i traded small. i also traded options, i could purchase 10 options and control 1000 shares of MSFT or whatever. one can start with a tiny bit of money and develop as a trader.
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This is a great accomplishment MarketSurfer. It shows great discipline, and is truly inspirational.
Enjoying your Surf Report journal as well. Thank you.
 
Can anyone shed light on this dilemma re: the PDt rule and options?

If I have $25,000 in an acct and I buy a $2000 spread that appreciates to $2500 at day's end. My cash would be $23K but my net liquidating value would be $25,500. Would I be under margined bec my cash is now below $25 even though my equity is above 25K? Thanks in advance
 
Quote from marketsurfer:

an attorney friend and i talked about the pattern day trader regulation earlier this evening. i thought i would float an idea to see if there is any interest in looking into a class action suit to eliminate the pattern day trader rule. being that there are many many years of the market without the government dictating how much you need to participate, it may be possible to show economic discrimination fostered by the regulation. in addition the seems to hurt the new trader by giving him more rope to hang himself with. do you think there is any interest in pursuing this ?? do you think there are grounds for such an action ?? do you personally have any interest in potentially being part of such a "class" ??

just floating a trial balloon--pardon the pun ! :)

surf
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ABSOLUTELY!

Count me in. This stupid rule goes against free trade.
 
Quote from GATrader:

If I have $25,000 in an acct and I buy a $2000 spread that appreciates to $2500 at day's end. My cash would be $23K but my net liquidating value would be $25,500. Would I be under margined bec my cash is now below $25 even though my equity is above 25K? Thanks in advance
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You would be under margined at IB. Maybe some other brokers would say not, I don't know.
 
I have always thought that the rule was partly to blame for the market down turn.

Its simple demographics, there are a lot more people that could participate actively trading with a $5000 account value than vs $25,000 (there should be no minimum amount requirement).

When the SEC changed to the account value $25,000 minimum it closed out trading for a lot of would be traders, thats just like closing an auction off to some of the buyers, less participants means lower prices. Am I right?
 
It's a free country (at least in the US, well, mostly free) and if us newbie part-time day traders want to lose our money becuase we have less than $25k then let us! Call it a stupid tax or whatever you want, but I reserve the right to day trade my undercapitalized account if I want. I've got a good job. I can keep feeding my account a few thousand here and there!
 
I can just imagine the reasons for the rule (I smell Liberal Bureau Crats with studid ideas).

Let me guess the Pattern Day Trading Rule was for

1. To protect the little guy from himself, and keep AK-47s out of the Trading Room, but never mind, that guy started with 400K.

2. To protect the market from Traders causing rapid ups and downs

And who knows what silly imagined problems the PDTR was supposed to solve.

I believe any interferance with the right of a person to participate in the open and free market is illegal and contrary to our free market ideals.

In other words who is the SEC to tell a investor or trader, when they can be allowed to take profits or for that matter to buy and sell a stock, no matter what the reason.

Maybe the timing is right to apply some pressure to the new folks in the SEC.
 
Quote from agin1415:

Let me guess the Pattern Day Trading Rule was for

1. To protect the little guy from himself, and keep AK-47s out of the Trading Room, but never mind, that guy started with 400K.

2. To protect the market from Traders causing rapid ups and downs

I believe any interference with the right of a person to participate in the open and free market is illegal and contrary to our free market ideals.
In other words who is the SEC to tell an investor or trader, when they can be allowed to take profits or for that matter to buy and sell a stock, no matter what the reason.

. . . I have always thought that the rule was partly to blame for the market down turn.
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The PDT rule became effective September 28, 2001. The precise moment when everyone was being thoroughly distracted by something else. The market downturn cannot be blamed on the PDT rule. The market was well into its death spiral before anything that took place in September 2001.

The logic of the PDT is definitely pretty flimsy, and as you stated the Atlanta daytrading massacre occurred at a "daytrading shop" by a guy who was playing with much more than $25,000. The PDT rule in fact extends twice as much daytrading margin leverage to those who fit the daytrader profile as was allowed at the time of the Atlanta incident. If anything, they're making the likelihood and severity of such an extreme blow-up twice as bad as before. These rules don't do anything to limit the full-time daytrading that takes place at prop-firms, but they do cramp the abilities of some individual who might want to make a mere handful of trades a week with a smaller (therefore less risky) amount of capital.

The SEC is the federal agency that was created after the stock market crash of 1929 to prevent anything like it occurring again. They have the authority to limit the activities of the stock market (but not the commodities market, that's why the PDT rule doesn't apply to Futures trading) in any way they choose. But the SEC is also supposed to be responsive to citizens, and we are allowed to give them feedback and tell them when their rules don't make sense. The SEC is not infallible, and we are not required to consider their decisions to be infallible. In the case of a ridiculous rule we have the right to go about trying to change the rule if we can point out that the rule and its stated objectives are illogical.
 
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