Pattern Day Trading Loophole??

[TraderSU]

Quote from spindr0:
And why in the world would you want to trade in the pre-market when the spread is larger??

Exactly that is the point ;-) Pre-market has larger spread and less action so you can easily sell to yourself without losing on spread. Remember there is no market order during extra-hours.

Take an example - ABC has current bid/ask of 10.14/10.30, so you put an order in A1 as limit-sell @ 10.20 and order in A2 as limit-buy order of 10.21 Both order should execute at same price & absolutely no spread loss.

Quote from spindr0:
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.

If your commission is ultra-low, this is not an issue - right? 3 * 2 < 7 ;-)

This technique should work great for small position traders who are otherwise limited by PDT and sometime forced to hold the risky position overnight.

Let me explain it by example.

My first buy is SRS @ 46; it hit stop @ 44 within an hour - one DT over. Similar happened with my other buy DXO @ 3.2; it hit stop @ 3.1 - second DT over.

With only 1 life-line remaining, now I'm scared. I might avoid putting stop for my third trade and hold it overnight.

Now re-visit the revised scenario.

First buy is SRS @ 46 in A1 and set a stop-sell-short @ 44 in A2. stop executed and my loss is locked without triggering any day trade.

If my next order is for different stock then I can even swap the account; example - buy DXO in A2 and set the stop-sell-short in A1.

I can buy SRS again @ 38 in A1 and possibly sell higher on re-bound @ 43 by selling-short in A2.

Next day, I settle all SRS in one trade so, effective commission is only 50% more.

No day trade ever

Cheers,
Sudhaker
http://nopdt.com

 

[TraderSU]

Quote from spindr0:
Even if you could accurately keep track of which account to trade in without making mistakes, that's a horrible suggestion.

What are my options?

* Do not trade for 5 days after three DT is exhausted.
* Do not exit the fourth position even after realizing that my predicting on market direction was dead-wrong and take a huge loss next day.
* Do exit from fourth trade immediately and get flagged as PDT (out for 90 days).
* PROPS - I tried few but they wanted high volume, have monthly fee and their software will not connect from behind the proxy-server at my work.

PDT IS A SCAM - isn't it?

 

[forrestang]

I don't get the pattern PDT rule. It makes no sense to me?

As described, PDT was to ensure that one does not incur more losses than he can cover with the size of his account.

So why just not allow trades that go over your buying power?

If you're buying option XYZ, and it costs $1000 for the trade, that's the most you can loose. If you have a 10K account, you just ate up $1K of buying power.

So your broker should only allow you to place 10 contracts max.

What's the problem?

 

[Surdo]

Quote from sudhaker:

Pre-market has larger spread and less action so you can easily sell to yourself without losing on spread.

It is also illegal to take your own name BTW.

Quote from sudhaker:
What are my options?

Trade futures you rocket scientist.

 

[dsq]

A daytrade is an open and close of a position during the same day.
You can daytrade by buying the stock then instead of closing the trade by selling it just open another postion by shorting it and you lock in your profit or loss for that day.Next day you close out both the long and short position.

 

[gigsup]

Quote from Surdo:

Ever hear of futures?

Sounds like the best option to me. Problem with the PDT is you get stuck with positions you may not want to hold overnight.
Or, if forced out your trading is limited for the next 5 days.

 

[spindr0]

Quote from sudhaker:

Pre-market has larger spread and less action so you can easily sell to yourself without losing on spread. Remember there is no market order during extra-hours.

Take an example - ABC has current bid/ask of 10.14/10.30, so you put an order in A1 as limit-sell @ 10.20 and order in A2 as limit-buy order of 10.21 Both order should execute at same price & absolutely no spread loss.

LOL. I like the word " SHOULD ". What happens if someone else hits one side of your two orders and the market moves against the other side? You'll be left there holding your joystick while the other side goes directional, possibly for or possibly against you but hardly the no risk thesis you offer.

 

[spindr0]

Quote from sudhaker:

If your commission is ultra-low, this is not an issue - right? 3 * 2 < 7 ;-)

First buy is SRS @ 46 in A1 and set a stop-sell-short @ 44 in A2. stop executed and my loss is locked without triggering any day trade.

If my next order is for different stock then I can even swap the account; example - buy DXO in A2 and set the stop-sell-short in A1.

I can buy SRS again @ 38 in A1 and possibly sell higher on re-bound @ 43 by selling-short in A2.

Next day, I settle all SRS in one trade so, effective commission is only 50% more.

That's very clever double talk to avoid the truth. If you buy SRS in A1 and DXO in A2, you have two commissions. When you want to close the two positions, you have two more commissions. That's a total of four regardless of how low your commission rate is. 4 is twice as much as 2, capiche?

But if writing that 3 * 2 < 7 makes you happy, go for it. And if you think that buying SRS twice and selling it all at once reduces the number of commissions below 4, I have a bridge to sell. Interested?

 

[spindr0]

Quote from forrestang:

I don't get the pattern PDT rule. It makes no sense to me?

The SEC has assumed that if you have less than $25g that you are an unsophisticated trader and that they need to protect you from yourself

 

[spindr0]

Quote from dsq:

A daytrade is an open and close of a position during the same day. You can daytrade by buying the stock then instead of closing the trade by selling it just open another postion by shorting it and you lock in your profit or loss for that day.Next day you close out both the long and short position.

And you are currently shorting against the box successfully to circumvent the PDT rules? IOW, you have a broker who lets you short the stock that you are long and doesn't call it a sale?