Pattern Day Trading Loophole??
- Thread starter learn&earn
- Start date
Just to be contrarian:
Do you think the market players care about protecting traders from themselves? This is the official reason for the PDT rule. I mean, the market relies on a steady stream of losers and currency created out of thin air to allow winners to win. Remember, lots of little losers are generally on the other side of your large winning trades. The two groups of losers are: other individual traders and our currency.
Large players in the markets do EVERYTHING in order to protect their competitive advantage. Back in the 'day', you had to short stocks on an uptick or zero plus tick, so most traders were prevented from taking positions at smart points when stocks fell. Sure, you could short on retracements, but everyone else was trying to do that as well (in retail trading, those of us at prop firm simply used bullets, which also generated more fees).
Another "innovation" by the big boys was the capital lockup rule at prop firms, thus reducing an individual traders' competitive advantage further. Don't like how your firm is treating you, ..tough shit your original capital is stuck here for a year.
One thought I have always had, even if it proves to be ultimately erroneous in action, is that the 25K pdt rule was to prevent the unlikely event that smart guys with discipline could day trade their way up from nearly zero capital to something like taking a large piece of the pie from others. The PDT rule, even though 25K in today's dollars is probably the equivalent of 5k when I started, just from reading the threads on this, is a significant barriers to 90% of all traders who want to start. A few of these traders would eventually take a piece of the pie in time.
Most all day traders lose, and lose their capital quickly. So I can see the merits of the PDT rule from the 'official' story. While it is unlikely that being able to day trade on small funds can create big winners in the markets, beyond fixed costs, a disciplined trader with a reasonable methodology can run up an account from a small amount. In a weird perhaps unprobable sense, I think this is the establishments biggest fear, and most legislation that prevents trader freedoms can be looked at through this lens and not be completely of base.
Do you think the market players care about protecting traders from themselves? This is the official reason for the PDT rule. I mean, the market relies on a steady stream of losers and currency created out of thin air to allow winners to win. Remember, lots of little losers are generally on the other side of your large winning trades. The two groups of losers are: other individual traders and our currency.
Large players in the markets do EVERYTHING in order to protect their competitive advantage. Back in the 'day', you had to short stocks on an uptick or zero plus tick, so most traders were prevented from taking positions at smart points when stocks fell. Sure, you could short on retracements, but everyone else was trying to do that as well (in retail trading, those of us at prop firm simply used bullets, which also generated more fees).
Another "innovation" by the big boys was the capital lockup rule at prop firms, thus reducing an individual traders' competitive advantage further. Don't like how your firm is treating you, ..tough shit your original capital is stuck here for a year.
One thought I have always had, even if it proves to be ultimately erroneous in action, is that the 25K pdt rule was to prevent the unlikely event that smart guys with discipline could day trade their way up from nearly zero capital to something like taking a large piece of the pie from others. The PDT rule, even though 25K in today's dollars is probably the equivalent of 5k when I started, just from reading the threads on this, is a significant barriers to 90% of all traders who want to start. A few of these traders would eventually take a piece of the pie in time.
Most all day traders lose, and lose their capital quickly. So I can see the merits of the PDT rule from the 'official' story. While it is unlikely that being able to day trade on small funds can create big winners in the markets, beyond fixed costs, a disciplined trader with a reasonable methodology can run up an account from a small amount. In a weird perhaps unprobable sense, I think this is the establishments biggest fear, and most legislation that prevents trader freedoms can be looked at through this lens and not be completely of base.
big fish eat small fish
wolf attack sheep
just darlvinism
the PDT rule favors big players, not favor small retail traders.
like old days, there is no such rule. Jessise livemore cat day trade with just couple hundreds.
definitely SEC should pose another rule such as BIG SIZE rule.
since a big size for example, 1m shares or 2m shares, will impact a market with daily volume of 0.8m greatly. if you sell , maybe drop sharply, if you buy, maybe rise sharply. that creates a very abnormal market!
dionaure falls to the ground like another plenet crashed into earth.
the reason for setting this rule is unjustified from a small retail trader point of view, how can a trader just trade
100shares affect the market, not at all! to protect them, and to lock them in a losing position? I suspect most time is to lock them into losing position.
like Lethman brothers, Goldman saches, ... those big firms, should be posed a strict limititation of their size, plus their activity, to protect a free market tomaintain a normancy.
wall street is still a wild land.
who is big,who wins
wolf attack sheep
just darlvinism
the PDT rule favors big players, not favor small retail traders.
like old days, there is no such rule. Jessise livemore cat day trade with just couple hundreds.
definitely SEC should pose another rule such as BIG SIZE rule.
since a big size for example, 1m shares or 2m shares, will impact a market with daily volume of 0.8m greatly. if you sell , maybe drop sharply, if you buy, maybe rise sharply. that creates a very abnormal market!
dionaure falls to the ground like another plenet crashed into earth.
the reason for setting this rule is unjustified from a small retail trader point of view, how can a trader just trade
100shares affect the market, not at all! to protect them, and to lock them in a losing position? I suspect most time is to lock them into losing position.
like Lethman brothers, Goldman saches, ... those big firms, should be posed a strict limititation of their size, plus their activity, to protect a free market tomaintain a normancy.
wall street is still a wild land.
who is big,who wins
it's a govopoly my friends.
the government has assimilated much of the free enterprise system, and , to credit Ed Seykota, now routinely picks the winners and losers. Either you are with the govopoly or expect to get regulated, feed, and taxed very heavily.
The parallel regulations in trading industry perfectly mirror this trend.
the government has assimilated much of the free enterprise system, and , to credit Ed Seykota, now routinely picks the winners and losers. Either you are with the govopoly or expect to get regulated, feed, and taxed very heavily.
The parallel regulations in trading industry perfectly mirror this trend.