PDT question?

Quote from QdzResurrection:

Yes, it still counts.

As an expert on the subject, I recommend you learn the PDT rules, understand why they exist, and then forget about them. You don't need to interfere with PDT rules in this bull market. If you do, well, you may have some problems.
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Please tell me briefly why the PDT rules exist.

Thank You
 
Quote from tuna:

If its one order being filled no problem but if thats 3 buy orders and then its followed by a sell later in the day thats counted as 3 daytrades.
Same in case 2 ,they work off the buy orders not the sell orders
so 5 buy orders followed by 1 sell would equal 5 daytrades

Alternatively 1 buy order followed by 2 sells would be only counted as 1 daytrade
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You have that exactly opposite. They don't give a sh-it how many times you buy, they care about how many times you sell. Buy once and then sell half then sell another half and that is 2 daytrades.
 
Quote from MRWSM:

You have that exactly opposite. They don't give a sh-it how many times you buy, they care about how many times you sell.
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That may be true for some brokers, but not all. http://www.mytrack.com/dtfaq.htm , for instance, says
Each executed segment of a sweep order qualifies as a trade for purposes of day trading rules. For example, if your buy market or limit sweep order gets executed in 4 segments, that order actually counts as 4 trades, and will subject you to "pattern day trader" status if you subsequentely sell some or all of the shares the same day.
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(I'm not a mytrack customer; I just found their take on the rule while doing some research.)

Also, a broker may consider expiration of worthless options to be a trade, so you may want to check with your broker before opening option positions on the Friday before options expiration. One of my brokers uses this interpretation. In my case, I mistakenly closed out a position twice and wound up short 1 contract of a $.05 option, and the expiration later that day put me over the PDT limit.

Although the PDT rule states "However, if the number of day trades is 6% or less of total trades for the five business day period, the customer will not be considered a pattern day trader and the special requirements under paragraph (f)(8)(B)(iv) of this Rule will not apply", one of my brokers does not take the 6% part into account. In my case, I'd done over 140 transactions during the 5-day period, yet still became flagged as a PDT. So again, if you intend to be an active small trader, check with your prospective broker to see what their implementation of the rule is.
 
Quote from ER9:

If I buy 1000 shares of stock XYZ and it runs up nicely during the trading day, if I sell 990 shares at the end of the day and keep the remaining 10 shares until the next day, wouldn't this prevent a pattern day trade?

or, suppose I do this with several stocks, if I keep an small number of shares of each until the next day could I avoid the PDT rule?

Thanks
ER
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I didn't read all the responses, but I must ask "why do you want to "skirt" the PDT rule"...? If you're trading in 1000 share lots of "normal" stocks, $25-$50 or so per share, it can't be for lack of capital...so just embrace the rule...it's no big deal, since you're trading retail anyway...you may as well eliminate the extra "pressure" of possible rule violations.

Don:confused:
 
Quote from loufah:

That may be true for some brokers, but not all. http://www.mytrack.com/dtfaq.htm , for instance, says

(I'm not a mytrack customer; I just found their take on the rule while doing some research.)

Also, a broker may consider expiration of worthless options to be a trade, so you may want to check with your broker before opening option positions on the Friday before options expiration. One of my brokers uses this interpretation. In my case, I mistakenly closed out a position twice and wound up short 1 contract of a $.05 option, and the expiration later that day put me over the PDT limit.

Although the PDT rule states "However, if the number of day trades is 6% or less of total trades for the five business day period, the customer will not be considered a pattern day trader and the special requirements under paragraph (f)(8)(B)(iv) of this Rule will not apply", one of my brokers does not take the 6% part into account. In my case, I'd done over 140 transactions during the 5-day period, yet still became flagged as a PDT. So again, if you intend to be an active small trader, check with your prospective broker to see what their implementation of the rule is.
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Wow, now I'm really confused. LOL Different rules for different brokers, that really sucks. The way I read the PDT law is a daytrade is when you exit a position that was entered the same day. It does not specify whether you bought it in more than one trade. I guess some of these brokers reading between the lines.
 
Quote from Don Bright:

I didn't read all the responses, but I must ask "why do you want to "skirt" the PDT rule"...? If you're trading in 1000 share lots of "normal" stocks, $25-$50 or so per share, it can't be for lack of capital...so just embrace the rule...it's no big deal, since you're trading retail anyway...you may as well eliminate the extra "pressure" of possible rule violations.

Don:confused:
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I'm also confused about your statement, Don; why would anyone want to embrace a rule that goes against everything that capitalism stands for? Live with it -- if we are forced to-- but, certainly not embrace.:confused:
 
Quote from stockerup:

I'm also confused about your statement, Don; why would anyone want to embrace a rule that goes against everything that capitalism stands for? Live with it -- if we are forced to-- but, certainly not embrace.:confused:
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Perhaps "embrace" was a poor choice of words. Over the last 25 years in the markets, I have seen many rule changes, many of which were really costly and irritating. But we had to comply with them if we were going to succeed in the field that we love.

The rule was, again, supposed to be "protecting" the people. I, too, often wonder "who in the heck are they protecting" at times.

My point is that we all learn the rules, find out where we "fit" into the equation, and do our level best to either get out of that "restricted area" or deal with it until we can...that's all I really meant.

It's good to see on the same board where so many are so "vocal" about wanting all this "protection" from the MM's, Spec's, other traders and firms, that many also prefer the benefits of the free capitalist system.

It's easy enough to join a firm and to forget about PDT rule (but that's not my point here)... a simple increase in capital will put you back on the same footing as other investors who want to use the 4:1 leverage. The distinction was made back in 1998, with the rules following shortly thereafter. I found it funny then that they were supposed to be "cracking down" on daytrading, and then doubled the amount of buying power for the PDT to use....a bit of a contradiction.

Don
 
Isn't it illegal to use borrowed funds for stock trading?

Michael B.


Quote from QdzResurrection:

let's say MSFT is at 25
500 * 25 = 12500
800 * 25 = 20000
300 * 25 = 7500

Why do you want to be worried by the PDT rules in this example? Add some money and get the freedom!

I know some wonderful deals of loans. It is amazing way to get cash to buy stocks. If you are interested, you should look for a good deal for yourself. It is very easy.
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