Pattern Day Trading Loophole??

1. In a cash account you cannot short (but you can buy puts, however you cannot sell premimum unless you spread)

2. 4 trades and you get 90 days none trading (that is why I believe IB gets you at 3).

3. OP's friend has most likely inserted a little lie in there. With two accounts you are still limited to 3 round trips otherwise you will run out of margin or you violate the PDT.

OP: choose another friend. Either you did not report ALL what he said correctly or he is a combination of truth and ...
 
The two accounts are at different brokers. Apparently the rule applys to the account( i.e. <4 "day trades" per account) and not the account holder(i.e John Doe 411-XX-XXXX). Unless he is using 2 different SSN's and if that's the case then thats a different can of worms! Maybe he is lying, i just thought it was interesting how he claimed to get around the rule. Thats still only 6 day trades every five days. Most traders do that daily.
 
makes sense learn&earn.

I know someone who does that too. 2 accounts with different brokers, so 6 day trades.

Still not enough though.

Such a stupid rule. Suprised after all this time there isn't more ways of getting around it
 
Hey, you can't get something for nothing. I agree they're expensive but they're doing something for you and you have to pay.

I ended up ponying up the extra $$$ to meet the $25K minimum cuz I couldn't stand worrying about it all the time. I'm generally a swing trader, but on bad days where I'm stopped out multiple times on entries, I've come this close to hitting the PDT limit.
 
I broke down a pdt account into smaller acounts at my broker some time ago. My primary reason was to be able to hold more risk overnight without a loss taking me below 25k min. After a time, I was contacted and told to liquidate all but one account or all but 1 would be liquidated for me.

The assumption was that since I had been daytrading, I would be trying to navigate around the rule. I was kinda pissed, but when I signed up with my broker, they (as most) have a clause stating I can be liquidated for any reason they see fit.

I rolled my accounts back into one pdt as they requested, and opened a small swing account in a seperate broker. Not sure on the legality of daytrading across multiple small accounts, but liked my broker, so decided to follow their regs.
 
My gut feeling is that the PDT rule will eventually end up being rescinded.

PDT rules were set up (I think) to protect the average Joe from himself. One of the bad effects it had was to drive some average Joes out of familiar territory (stocks) into more exotic things like index futures and forex. Ironically it may have had the opposite effect from its original intent.

Having the PDT rules apply only stocks and options seems unfair to most people. In addition, like I pointed out earlier, if you have a bad day entering swing trades and are stopped out repeatedly, you could trigger the PDT.
 
There can be an easy PDT workaround using two margin accounts - say A1, A2.

One can go long in the first margin account A1 and latter (same day) short-sell in other margin account A2 to lock the profit (or to limit the loss). Next day, cover the short position in A2 during pre-market (when bid-ask spread is bigger) or during market hours (at the expense of bid-ask spread).

When opening a new position with different stock, simply switch the role. Go long in A2 and short-sell in A1.

No day trade ever :-)

More details at http://nopdt.com/forums/pdt-avoidance/pdt-nirvana

Sounds interesting?

Cheers,
Sudhaker
http://nopdt.com
 
Quote from sudhaker:

There can be an easy PDT workaround using two margin accounts - say A1, A2.

One can go long in the first margin account A1 and latter (same day) short-sell in other margin account A2 to lock the profit (or to limit the loss). Next day, cover the short position in A2 during pre-market (when bid-ask spread is bigger) or during market hours (at the expense of bid-ask spread).

When opening a new position with different stock, simply switch the role. Go long in A2 and short-sell in A1. No day trade ever :-)
More...
Even if you could accurately keep track of which account to trade in without making mistakes, that's a horrible suggestion. You end up paying double the number of commissions as well as double the number of B/A spreads (slippage)...not to mention price change risk in the time it takes to execute the 2nd trade. And why in the world would you want to trade in the pre-market when the spread is larger??
 
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