Pattern Day Trading Loophole??

Quote from spindr0:

They're like the Pony Express - bids and asks can be miles apart :)
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Exactly - and that is the point.

Bid/ask spread is small during regular hours because of market-makers and high volume; MM always buy (at BID) and sell (at ASK) and provide liquidity to the market (and make small spread). This spread is usually a cent or two for any liquid stock and it is tough to find a middle ground. So we mostly transact with MM (or matching bid/ask from other individuals) and always lose on spread & slippage.

During extended-market hour bid/ask are miles apart. So we can easily find a price somewhere middle of the bid-ask GAP and use that on both order. Sell to yourself - no slippage, no spread loss.

If bid is 10.14 and ask is 10.24 ; you put limit sell @ 10.19 and limit buy @ 10.20 and both order will execute at same price (either 10.19 or 10.20) - WHAT IS THE CONFUSION?

Just avoid trading around 8:30 announcements.

Hope it explains. :D
 
Quote from sudhaker:

If you had 2 lots of SRS in A1 then your commission overhead is 50% as you will settle everything in 1 lot.

Similarly if you had 3 lots of SRS in A1, your commission overhead is only 33%.

I'm also not happy about this double commission, but what are my options?

MohdSalleh has already made this cruel comment.



Anyway, here is my point.
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It is a cruel business. Better get tough.
 
Quote from gigsup:

It is a cruel business.
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Aspiring daytraders with < 25K should become realistic about their trading skills. First they should learn how to take their 10K (or whatever amount) to more than 25K through EOD trading. If they can do that then they'll have a chance of survival in daytrading. If they're unable to do that due to lack of trading skills or lack of patience, then it is very unlikely that they would survive intraday trading anyway.

Instead people devise all kinds of unrealistic schemes to get around PDT, even use their credit cards to fund their accounts, only to realize that the hurdle wasn't PDT rule but their lack of insight about what professional trading is all about.

Subject closed, moving on to another thread. :D
 
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 :-)

http://nopdt.com
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Brilliant idea! But you pay double commission and I don't think it is legal to trade with yourself (not that I think you will be caught or actively prosecuted, the prohibition is to prevent price manipulations - much more serious matter than PDT violation).
 
The Pattern Day Trader rule is "designed" to save the inexperienced traders from hurting themselves. Why they changed the margin rule from 2:1 to 4:1 is beyond me. Not that I am complaining. I would love to see them change it to 10:1 or 100:1 (like futures).
 
Quote from Bolimomo:

The Pattern Day Trader rule is "designed" to save the inexperienced traders from hurting themselves. Why they changed the margin rule from 2:1 to 4:1 is beyond me.
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That may be the propaganda that the SEC and others are pushing but in reality, the rule is to guarantee brokers that their margin is covered (the 25g minimum). The margin was increased to 4:1 to appease everyone but the little guy :)
 
ALL the NASD/SEC rules are for the big guys.

Good example are trading curbs. Who do you think benefits when trading curbs kick in? The little guy? Ha!! Its to protect the big guys because they know they can't move size in a panic.

But, they really care some schmuck daytrader might blow his account. Really, they do. They would tuck you in at night if it were possible. They really care that much. :D :D
 
There are leverage sub-contractor trading services out there that will allow you to trade with 10:1 day trading margin and open an account for $5000.
 
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