PDT and Account Freezing Issues

[DataCruncher]

I have one main larger trading account, but I am thinking of opening another smaller trading account in order to try out another broker. Let's say I fund it with say 26k (for a margin equities account). If it falls below 25k the account is frozen except for liquidating transactions because it will be a pattern daytrading account.

I understand you can have them lift the margin call once every 90 days, and once they lift it you cannot make more than 3 daytrades every 5 day rolling period(until account value goes back over 25K)

However if it goes above 25K, and then falls below 25K a second time within 90 days, your account is frozen again except for liquidating transactions.

If this happens, can you simpy transfer your money out of the account? For example, transfer some money out, open a futures account with the same broker, and then transfer money into that? Or is your account literally frozen where you can't even withdraw your own money for 90 days? A broker couldn't legally do that could they?

 

[satchel]

it's your money

yours

 

[Surdo]

It's frozen for opening new trades, come on!

 

[DataCruncher]

Quote from Surdo:

It's frozen for opening new trades, come on!

is it frozen as far as internal transfers? for example if my equities account gets frozen at 24K, will they let me open a new futures account and move the money in there and start trading immediately(don't need 25K since it's futures)?

 

[tomahawk]

Where did you get the word 'frozen'?

Falling below $25k just means you can't do intra-day round trips.

 

[DataCruncher]

Quote from tomahawk:

Where did you get the word 'frozen'?

Falling below $25k just means you can't do intra-day round trips.

Not true according to MB trading. I was surprised too but apparently your account is frozen except for selling positions you already own. I thought it would just revert to a cash account once its under 25K, but no you can't even do cash trading. Not sure if it's an SEC rule across the board or just an MB thing.

 

[Surdo]

Perhaps it's time to go back to school or find a job?

 

[RiceRocket]

If you open an account at a different brokerage, then you can trade again. If you open another account at the same brokerage, it's considered the same account. So, say you have 2 accounts at one brokerage. You do 3 day trades in one account, then 3 day trades in the other account, you will still get flagged for PDT.

 

[SForce]

Quote from DataCruncher:

Not true according to MB trading. I was surprised too but apparently your account is frozen except for selling positions you already own. I thought it would just revert to a cash account once its under 25K, but no you can't even do cash trading. Not sure if it's an SEC rule across the board or just an MB thing.

It's an MB thing (and some other brokers). The brokers that enforce PDT properly just take away your margin.

(Example: https://us.etrade.com/e/t/estation/help?id=1307030000#Know2) (I don't use ETrade, they just have the most readily available proof of point).

 

[trader_david]

no, brokers will not do that. pdt is specific with every account.

you can open many small account with the same brokers (if you have three account, you get nine trades every week, good enough for you to play, also you can play tricks like transfering your money from the no day trade left account to the day trade remaining account, then transfer the money back to do the same)then you get enough trades and enough fund to do day trading. that is legal.

or you just open a future account, then transfer out the money to trade future, they will not freeze your money.

Quote from RiceRocket:

If you open an account at a different brokerage, then you can trade again. If you open another account at the same brokerage, it's considered the same account. So, say you have 2 accounts at one brokerage. You do 3 day trades in one account, then 3 day trades in the other account, you will still get flagged for PDT.