Pattern Day Trading rules

This is a discussion on Pattern Day Trading rules within the Discretionary Trading forums, part of the Methods category; http://www.eregal.com/daytrading.htm Day Trading Margin Rules The New York Stock Exchange (NYSE) and the National Association of Securities Dealers, Inc. (NASD) ...

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Old Oct 21, 2004, 10:12pm   #1
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Pattern Day Trading rules

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http://www.eregal.com/daytrading.htm
Day Trading Margin Rules
The New York Stock Exchange (NYSE) and the National Association of Securities Dealers, Inc. (NASD) have filed amendments to NYSE Rule 431 and NASD Rule 2520 with the Securities and Exchange Commission (SEC) which increase margin requirements for active security traders. As as result, effective August 27, 2001, all accounts identified as pattern day traders will be required to maintain a minimum of $25,000.00 in equity at all times. Pattern day traders whose equity falls below the $25,000.00 requirement must deposit the funds necessary to meet the equity minimum before normal trading can resume.

Pattern Day Traders
Under the amendments, "pattern day traders" are defined as those customers who day trade (buy and sell the same position within the same trading day) four or more times in five business days. In addition, if Regal knows or has a reasonable basis to believe that a client is a pattern day trader, the customer must be designated as a pattern day trader immediately, instead of delaying such determination for five business days.
Hi

do pattern day trading rules apply to all US stocks, or just Nasdaq100 stocks?

do pattern day trading rules apply to just stocks, or the trading of futures contracts also?

If a trader has 5 stocks that he trades, 1 stock per day of the week, and trades 3 positions per day in each of the 5 stocks, are they a classified as a pattern day trader?


Thanks a lot

jtrader.
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Old Oct 21, 2004, 11:08pm   #2
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Pattern Day-trading Rules apply to US Stocks only.

The rules do not apply to futures

Quote:
If a trader has 5 stocks that he trades, 1 stock per day of the week, and trades 3 positions per day in each of the 5 stocks, are they a classified as a pattern day trader?
Correct, it is the number of trades in a day that are opened and closed that count, the actual stock (or stocks), that this is enacted upon is irrelevant.


Paul
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Old Oct 22, 2004, 9:37am   #3
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JTrader started this thread Thanks Paul

so 4 trades in 4 seperate stocks in a 5 day week = a pattern day trader?

Many thanks

jtrader.
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Old Oct 22, 2004, 6:47pm   #4
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[QUOTE=jtrader]
so 4 trades in 4 seperate stocks in a 5 day week = a pattern day trader?
QUOTE]

Yep. Or the same stock, no matter.

Otherwise I could choose one stock that I liked and scalp that one equity 100 times a day, 5 days a week.

As you can see, that would definitely be a pattern day trader, even though I have only chosen one stock. As trader 333 says, you count the number of times you place a trade on a US equity - no matter if it is one or more equity.
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Old May 24, 2005, 12:42pm   #5
 
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[QUOTE=ardhill]
Quote:
Originally Posted by jtrader
so 4 trades in 4 seperate stocks in a 5 day week = a pattern day trader?
QUOTE]
Otherwise I could choose one stock that I liked and scalp that one equity 100 times a day, 5 days a week.
Nothing in the rules to stop you doing that if you really want to - just increased trading account size requirements so far as I am aware.
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Old May 31, 2005, 5:09pm   #6
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[QUOTE=ardhill]
Quote:
Originally Posted by jtrader
so 4 trades in 4 seperate stocks in a 5 day week = a pattern day trader?
QUOTE]

Yep. Or the same stock, no matter.

Otherwise I could choose one stock that I liked and scalp that one equity 100 times a day, 5 days a week.

As you can see, that would definitely be a pattern day trader, even though I have only chosen one stock. As trader 333 says, you count the number of times you place a trade on a US equity - no matter if it is one or more equity.
You cannot keep trading the same stock. Once you day traded the same stock or day traded any combination of stocks 4 or more times in a 5 day period you would be a pattern day trader.

This site has a good explanation of the rule: http://www.realfasttrader.com/nasdrule2520

That site also lists a broker that allows you to pattern day trade with less than $25,000, as long as you are not a US citizen. That broker is http://www.alldaytraders.com . I know someone who's been using alldaytraders for about 1 year now and he has been day trading just about everday and he only has about $11,000 in his account.
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Old May 31, 2005, 7:40pm   #7
 
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many firms offer daytrading to americans or foreigners with accts below $25k. my group uses hammer (sungard)for foreigners and tradespeed (merrill). we provide higher bp and lower rates.
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