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PDT Restriction (Pattern Day Trader FLag)
- Thread starter CodeX
- Start date
say i make the first trade on a monday, the second on a tuesday and the third on a Wednesday; three trading days. On the next monday does the counter zero ie, can i make another 3 day trades or should I only make one trade meaning that the Monday trade which is the first is the only trade which is reset?
Quote from CodeX:
say i make the first trade on a monday, the second on a tuesday and the third on a Wednesday; three trading days. On the next monday does the counter zero ie, can i make another 3 day trades or should I only make one trade meaning that the Monday trade which is the first is the only trade which is reset?
I used to daytrade in a small IB account and was always monitoring how many daytrades I had made. If I recall, it works like this:
It is a rolling 5 day period; sort of like how a moving average works (it's not averaging, though. just counting trades). So like you said, a trade Monday, a trade Tuesday, and a trade Wednesday. That is three trades in three days. On Thursday or Friday, you cannot trade or it will be 4 trades within 5 days.
Now here is where the rolling period starts. On the next Monday (or whatever the 6th day is after your first trade. In this example, we started on a Monday), The 5 day period runs from the last Tuesday until the current day (Monday). That means there was a trade on Tue and a trade on Wed. Two trades in the last 5 days, so on the 6th day, you can trade one more time. I hope that makes sense. Then on Tuesday, the five day period would run from the 1st Wed until the current Tue. There was a trade on Wed and Mon, so you could trade once this Tuesday. On Wed, one trade, Thur no trades, and so on.
I can go on and on, but here is it simplified. You can have a max of 3 trades in the LAST 5 days. Every new day, drop off the day from six days ago and count up your totals from the current day and the last four days. IB did a good job of doing it for you and letting you know how many trades you had left.