I am a bit confused with the 5 day rolling period. Example: Day Trade One Stock on Monday, Wednesday, Friday when is the next day I can take a trade without breaking the PDT rule? Also would it be better to have a cash account and split $12,000 up so I can take three trades per day equal to $6000 since the settlement is 2 days? Any help is greatly appreciated.
PDT Questions
- Thread starter blackafro2468
- Start date
Robert Morse
Sponsor
It is my expectation that Tuesday would be more than 5 business days after Monday, So you can do your next day trade the following Tuesday. You should confirm with your broker.
In a cash account you can never use leverage or short any stocks. You will have to wait for the stocks to settle. I would suggest, just based on this information that you start with a CASH account. I would also suggest you learn to trade options as a substitute, not to speculate with more leverage. Options settle in one day and would provide the choice of being long or short deltas, by being long calls or puts. It will also provide an opportunity with long options to trade stocks with a higher trading price. You will find with a $12,000 cash account you will focus on stocks under $20. With options to can trade index options like QQQ and SPY. I would also consider leaning to trade futures that have no PDT.
With Futures and Options please do not do your first trade without understanding how they work and the risk involved.
Bob
In a cash account you can never use leverage or short any stocks. You will have to wait for the stocks to settle. I would suggest, just based on this information that you start with a CASH account. I would also suggest you learn to trade options as a substitute, not to speculate with more leverage. Options settle in one day and would provide the choice of being long or short deltas, by being long calls or puts. It will also provide an opportunity with long options to trade stocks with a higher trading price. You will find with a $12,000 cash account you will focus on stocks under $20. With options to can trade index options like QQQ and SPY. I would also consider leaning to trade futures that have no PDT.
With Futures and Options please do not do your first trade without understanding how they work and the risk involved.
Bob
Thanks for the well explained response. I also see you are affiliated with lightspeed. Is it possible to open up an account with 12,000 and use the lightspeed trader platform? Thanks
Actually, its Monday when you can make the next trade. Trades fall off on the fifth day.
A way to get around it is by trading options and specifying to your broker that you don't want margin in your account. They are all cash and settle the next day. As long as you don't exceed 12K total in a day, you can round trip as much as you want.
Say FB $165 calls are $2. ($200/contract). You can buy and sell 10 contracts ($2000).... six times in one day.... and do the same thing tomorrow. No violation.
I would not however recommend trading options directionally unless you know whats up with the underlying stock. 10 contracts is 1000 shares so you are using huge leverage. Dangerous waters. Start small, ie 1 or 2 contracts.... and it has to be a very liquid instrument with penny spreads. $SPY or $IWM work well if you want to try and game general market direction.
Well, everything in the market and in life is ultimately a gamble.
There are varying degrees of gambling and risks -- but still all a gamble nonetheless.
It's better to be a High Risk/high reward talented/expert trader, rather then a low risk/low reward average/bad trader.
Does it really make a difference...if you lose your account in a day, or week, or month, or year?...if it was all inevitable anyways from the get-go.
Assuming you are lacking or deficient or ill-prepared ...then it was either way just a matter of time.
You can't delay the inevitable account blowjob...regardless if you wager 1% of your account or 100%. it will happen to most traders anyways through a combination of factors and variables within themselves, and their trading plan and execution and market factors and etc etc misc misc
2018 ET,
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The guy asked a question about SEC rules... not about life as seen through the eye's of Lawrence Lugar.Well, everything in the market and in life is ultimately a gamble.
There are varying degrees of gambling and risks -- but still all a gamble nonetheless.
It's better to be a high risk/high reward talented/expert trader, rather then a low risk/low reward average/bad trader.
Does it really make a difference...if you lose your account in a day, or week, or month, or year?...if it was all inevitable anyways from the get-go.
Assuming you are lacking or deficient or ill-prepared ...then it was either way just a matter of time.
You can't delay the inevitable account blowjob...regardless if you wager 1% of your account or 100%. it will happen to most traders anyways through a combination of factors and variables within themselves, and their trading plan and execution and market factors and etc etc misc misc
2018 ET,
.....Not everyone is born to lose. Quit polluting threads here.
Even though no margin is used and everything settles next day in your option example....aren't you still in violation of the 4 trades in 5 days, if under 25k ?
No. PDT applies only to margin accounts. https://en.wikipedia.org/wiki/Pattern_day_trader
As long as you avoid whats called a "free-ride", ie buying and selling a stock or option for which you do not have settled funds you can roundtrip trade as many times as you want. Since options settle the next day, his $12K will always be available. The trick is to not exceed 12K in a day. Here's a reference:
https://www.warriortrading.com/cash-account-definition-day-trading-terminology/
https://www.warriortrading.com/cash-account-definition-day-trading-terminology/
"One major plus side to cash accounts is you can day trade all you want as long as you have settled funds and won’t be held to the pattern day trading rules in a margin account. There is also no equity requirement to day trade in a cash account, which is a huge bonus for traders who don’t have the extra $25,000 lying around".
Not unlike you, who's delusional self image has them believing they know everything about everything. Everything that is, except the knowledge that prolonged steroid use makes one act and behave like an idiot. And you're the king of that one babe.