Pattern Day Trading rule...help...please!

[RedArmy]

If I made 4 or less day trades for 3 or 4 days a week (NOT all 5 days) will this rule apply to me? It shouldn't right?

As I understand you have to make 4 or more day trades for 5 days for this rule to apply to you...right?!?!? or am I wrong?????

Any help, greatly appreciated, thank you.

RA

 

[Dentalfloss]

if you trade with alldaytrader.com.you can trade as often as you want.4:1 margin.500 buck s to open an acc

 

[roguetrader]

The rule means 4 or more round trip trades in any rolling 5 day period. So if you made your first trade on Monday and your 4th trade on or b4 Friday you would meet the criteria. Similarly if you made your first trade on Wednesday and made your fourth trade on or b4 the following Tuesday that would also apply since it would fall into the rolling five days

 

[trendie]

http://www.tdwaterhouse.com/td/waterhouse/general/daytradregulations.html

What is a Pattern Day Trader?
A pattern day trader is defined as any customer who executes four or more day trades in an account within a rolling five business day period, provided the number of day trades is more than 6% of the total number of trades in the account during that period.

NB: note the word "rolling".
so, it would depend on which days you traded the following week !!

if you traded Mon, Tues, Fri = 3 trades over 5 days. ( youre OK )
but if you traded the following week; Mon, Tues, Thurs, ( 3 trades, SEEMS ok )
you would have traded 4 times over a rolling 5 day period. ( Fri, Mon, Tues, Thur = 4 trades within 5 days )
( youre NOT OK )

I THINK this is the case.

hope this helps.

 

[RedArmy]

Thank you all.


RA

 

[RedArmy]

I am right in assuming a daytrade is the opening and closing of a particular position? That counts as one day trade right?

What if I open a position of say 1000 shares in the morning and sell 500 in the afternoon and 500 at the close? Does this count as three day trades? or two? or one?

 

[roguetrader]

I am right in assuming a daytrade is the opening and closing of a particular position? That counts as one day trade right?

What if I open a position of say 1000 shares in the morning and sell 500 in the afternoon and 500 at the close? Does this count as three day trades? or two? or one?

A daytrade often called a roundtrip trade refers to the open and close within the same day you have opened a position in tose shares and it does not matter how many executions you use to close you have completed one daytrade. If however you bought 3 lots of the same stock, say 500 xyz then another 500 xyz and then another 500 xyz legging into a position as it were, and sold all 1500 at once on the same day, I believe that would count as 3 daytrdes

 

[JumpOff]

more clarification

Am I correct that a day trade is the opening and closing of a position during the same day? And it really doesn't matter how many transactions you have per day - as long as they are not opening a position and then closing that same position before the end of the day.

So if I open position1, 2, & 3on Monday,
Tues close position 1,2, and open 4,5,
Weds, close 3, 4 and open 6,7,8,9
Thursday close 5,6,7,8 and open 10,11
Friday close 9, 10, 11, open 12,13,14, the close 12,13,14,

In this example, I've trading lots of stock, but only day traded 3 times (all on Friday to get flat for the weekend).

Is this part of why swing trading became so popular -to avoid the day trading rules?
Part of what made daytrading so attractive was the ability to get flat before you went to bed.

Are you a former day trader who is now swing trading?
Do you do anything to offset the risk of being in the market overnight?
JO

 

[roguetrader]

JO you are absolutely correct here, the only "daytrades" were conducted on Friday as you pointed out. What you do have to be careful of here, and where some fall foul of the rule is that if you execute another daytrade before the next Friday you will have qualified as a pattern daytrader since the five day period is "rolling". This would mean that simply opening a trade before the next Friday in this senario carries some risk, as if it went suddenly against you, you may have to exit on the same day. When I tried to avoid this rule I would attach an expiry date to each daytrade of five days, this way I always knew how many trades were in play at any given time.