Need help understanding Pattern Day Trading limits

battleready

Newbie
2 0
New to the forum, about to get back into day trading. Haven't done so since 2000. Been reading a little and noticed that some new rules are in place that I can't quite wrap my head around. What I'd love is some actual examples of what's allowed and what's not allowed. I understand a $25k minimum can alleviate some of the restrictions, but I'm still confused on other limits.

Let's use the following hypothetical:

I set up a margin account with an on line broker with $50k cash to start with.

Day one I buy 1000 shares of an $80 stock, keep it an hour and sell it for $81. How much more trading that day can I do and stay within the allowed limits? Can I buy and sell the same or different stocks multiple times as long as I've closed the sale before I buy another, and never go over $100k (margin limit) at any given time?

Thanks in advance for any assistance.
 

Gustavo_ZAM

Junior member
20 0
You should be able to open and close positions intra-day up to your permitted buying power as many times as you wish.

However, at the prop firm I am associated with, $50k cash would be allotted far more than $100k in intra-day buying power.
 

battleready

Newbie
2 0
You should be able to open and close positions intra-day up to your permitted buying power as many times as you wish.

However, at the prop firm I am associated with, $50k cash would be allotted far more than $100k in intra-day buying power.
Thanks, what I was referring to was exceeding $100k on any one open position. example, with $50k cash, I couldn't buy by $150k of stock, say 2000 shares of a $75 stock, even if I closed the position before the end of the day. Am I wrong?
 

Kaeso

Established member
836 91
New to the forum, about to get back into day trading. Haven't done so since 2000. Been reading a little and noticed that some new rules are in place that I can't quite wrap my head around. What I'd love is some actual examples of what's allowed and what's not allowed. I understand a $25k minimum can alleviate some of the restrictions, but I'm still confused on other limits.

Let's use the following hypothetical:

I set up a margin account with an on line broker with $50k cash to start with.

Day one I buy 1000 shares of an $80 stock, keep it an hour and sell it for $81. How much more trading that day can I do and stay within the allowed limits? Can I buy and sell the same or different stocks multiple times as long as I've closed the sale before I buy another, and never go over $100k (margin limit) at any given time?

Thanks in advance for any assistance.
you wouldn't have the restriction you are thinking about because you have over $25K in the account, and the proceeds from the sale would be classed as available funds for margin - although they are not actually settled
 

Gustavo_ZAM

Junior member
20 0
Thanks, what I was referring to was exceeding $100k on any one open position. example, with $50k cash, I couldn't buy by $150k of stock, say 2000 shares of a $75 stock, even if I closed the position before the end of the day. Am I wrong?
Thanks for clarifying. I was speaking from a prop trading account stand-point, where margin rules do not apply like like a brokerage account. Traders at Zimtra allotted $100k buying power can open up can open up that limit intra-day and trade in and out of it as much as they'd like. Some can also hold overnight. In your specific case, it sounds as if you would be limited to opening up to $100k, so you would only be able to partially fill your 2000 share order @75. But I would definitely check with the broker regarding margin rules. Best of luck!
 
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