Pattern Day Trading rules

  • Welcome to the newest version of Trade2Win! We're running on the latest version of, what we consider to be, the best forum software available today. Our aim was to keep things as familiar as possible but focus on improving speed, security and usability. We hope you like the result! Please post your questions, comments, suggestions and feedback in the What's New and Feedback Thread - Sharky.
Dec 30, 2002
5,741
506
173
#1
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.
 
Jan 14, 2003
8,420
870
173
UK
#2
Pattern Day-trading Rules apply to US Stocks only.

The rules do not apply to futures

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
 
Dec 30, 2002
5,741
506
173
#3
Thanks Paul

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

Many thanks

jtrader.
 

ardhill

Active member
Aug 22, 2004
263
4
28
Belfast, Northern Ireland
#4
jtrader said:
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.
 

peterpr

Active member
May 4, 2004
609
7
28
Derbyshire
#5
ardhill said:
jtrader said:
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.
 
Apr 27, 2004
47
2
18
USA
#6
ardhill said:
jtrader said:
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.
 
May 31, 2005
2
0
11
FL
#7
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.