Does the 'Day-Trading Margin Requirment' apply to commodities?
I want to practice and learn day trading buy I don't have a spare 25,000$ to start it. I thought about trying to investment in instruments other than stocks but don't know if the rule apply to commodities Any help?
Fellow Astronauts, I don't think the subject has been touched before but regarding the rapid increase of retail traders (myself included) over the past few months, we've seen A LOT of complaint about the PDT rule. Especially since many of us are running small accounts. I've just done a quick google to find out that such petitions have been done before, in the last couple years, but with very few signatures. Knowing that this sub has now over 250k members, most of them with access different social media to spread the word, I believe we could gather a significant amount of signature to hopfully finally make a change to this arcaich rule. A couple links : Reason behind the PDT rulePetition remove/change PDT ruleAnother one There are a couple more out there, I'll let you look it up. Now I as you can see the PDT rule date from 2001... I think it's safe to say that things have dramatically changed since then. How is it that someone with $25k can get in and out of a postion as many times as he wants and not someone with $5,000, 500 etc.. How many times have you seen your portfolio sinks because you didn't have any day trade left? Or how many time have you enterend a postion without a stop loss on the first day because of it? So my options are either a margin account and get limited on day trades or a cash account and have to wait for the fund to settled ? What about an account where I can day trade, choose not to use margin and stay within my cash & sweep? Maybe an account where I cannot short a stock as I understand the risk associated with it? Could we do a margin account with restriction on leverage and short until 25k or X $ is reached and lift the day trade restriction? In my opinion the PDT rule isn't here to protect the new traders, this is BS. Trading IS all about risk management and the PDT rule isn't doing anything to help out, it is just here to protect the firm from the risk associated with a margin account. Now I am just a newbie and I might be talking a bunch of garbage, If so please educate me. I want to know what is the general opinion on the subject, if people have different ideas they want to run through. Depending on the reactions maybe create a new petition with at least 100k signatures or more.. What are you thoughts ? PS : Please excuse any typos, English is not my native language.
Question: What counts as eligible securities for the PDT rule?
Snagged this from this page on the finra site: " Does the $25,000 minimum equity requirement have to be 100 percent cash or could it be a combination of cash and securities? You can meet the $25,000 minimum equity requirement with a combination of cash and eligible securities." But I can't find anything anywhere that specifies what constitutes an "eligible security." Reason I ask, I have a brokerage account that is worth more than the 25k, but it is all in index funds, ETFs and other stocks.
Does anyone know the intraday day trading margin requirements for Interactive Brokers and ETrade? Specifically for their futures. I can’t seem to find that info anywhere and when I ask the chat they try to make me call the trade desk which I’m trying to avoid.
https://petitions.whitehouse.gov/petition/proposal-remove-pdt-rule-day-trading-margin-requirements I found this petition while scrolling through stock twats and I couldn't think of a better community to share this with. It's a petition to remove the PDT + day trade margin requirements. If we don't take action now. Who will? Why should wall street only be allowed unlimited day trades? Why should wall street only be allowed unlimited leverage? Why should we be confined by the shackles of poverty? NOW IS THE TIME. WE, THE AUTISTS, DON'T WANT MARGIN CALLS THEY'RE RETARDED WE, THE AUTSTS, DONT WANT PDT'S IN THE SLIGHTEST WE, THE AUTISTS, WILL NEVER BE DIVIDED NOW IS THE TIME. TAKE ACTION STAND FOR WHAT IS YOUR GOD GIVEN RIGHT WE WILL CHANGE THE FUTURE AS WE HAVE BEFORE VOTE NOW
If you’ve used all 3 of your day trades and dip above then back below the FINRA $25k minimum are your 3 days reset?
If you’ve used all 3 of your day trades and dip above then back below the FINRA $25k minimum are your 3 days reset? Hope that makes sense. Couldn’t find this answer online. Example Tuesday: No trades. * Day trades: 0 * Day trades left: 3 * Closing Balance: $11k * Opening Balance: $11k Wednesday: Rode SNAP & CMG to the top at open and then closed. * Day trades: 2 * Day trades left: 1 * Opening Balance: $11k * Closing Balance: $26k Thursday: Per FINRA rules, no more day trade limits, I celebrate by yolo’ing on GOOGL PUTs, loose $23k in minutes, then panic sell. * Day trades: 1 * Day trades left: N/A (was above $25k at open) * Opening Balance: $26k * Closing Balance: $3k (don’t bet against the GOOGL!) Friday: No trades. Day spent crying. * Day trades: 0 * Day trades left: ? * Opening Balance: $3k * Closing Balance: $3k How many “Day trades left” do I have today? Is it: * 3 - resets and rules applied start over today as if they are new * 1 - didn’t count Thursday’s day trade while I was above but since rules are applied again it doesn’t mean they were rest and still counts Wednesday’s 2 day trades * 0 - some condition counted my 1 day trade while I was above the $25k FINRA rule on Thursday Don’t know what other info I can provide but here https://invest.ameritrade.com/cgi-bin/appshelp/main?target=marginTrading/dayTrading/dayTradingMarginRequirementsNASDPatternDayTradingRules > Minimum Equity Requirement A pattern day trader's account must maintain a day trading minimum equity of $25,000 on any day on which day trading occurs. The $25,000 account-value minimum is a start-of-day value, calculated using the previous trading day's closing prices on positions held overnight in your account.
What happens if a brokerage allows a trader to pattern day trade options, say 50 round trip trades a week, with avg. equity 15-20K?
Better for brokerage to allow day trading , since more trading fees and is this rule audited/enforced? A person told me they traded options for say 4 weeks with avg 50 round trip trades per week with not enough equity - is that possible? Per FINRA https://www.finra.org/investors/learn-to-invest/advanced-investing/day-trading-margin-requirements-know-rules 'What happens if the equity in my account falls below the minimum equity requirement? If the account falls below the $25,000 requirement, you will not be permitted to day trade until you deposit cash or securities in the account to restore the account to the $25,000 minimum equity level.'
What do you think about the 'pattern day trader' rule? Is it a good idea? Is it moral?
Day Trader Rule: The Financial Industry Regulatory Authority (FINRA) in the U.S. established the "pattern day trader" rule, which states that if a stock trading customer makes four or more day trades (opening and closing a stock position within the same day) in a five-day period the customer is considered a day trader and must maintain a minimum $25,000 account balance.
I was flagged as a PDT, then I deposited the required $25,000. Robinhood still says I'm restricted?
After being marked as a pattern day trader for the second time last month, I finally deposited the required $25,000 into my Robinhood account on Tuesday. The deposit was cleared on Friday, yet my Robinhood account page still says I'm restricted from day trading. From what I understand, this can be for one of two reasons:
The more likely reason: You must hold the minimum $25k balance overnight and day trade the following day. Since the deposit was cleared on Friday morning, I would still be restricted for that trading day. Thus, I'll be able to start day trading on Tuesday (thanks to President's Day).
My concern: Since I'm restricted until May to day trade, the restriction will continue even though I've met the requirement. If this is the case, I won't be able to fully day trade until May. I'm crossing my fingers that this isn't the case.
Also, am I right in thinking that there are no limits to how many day trades I can place if I'm over the minimum $25k? Aside from stepping over "Today's Day Trade Limit" on my RH account page, I could theoretically place thousands of small day trades with no restriction? Hopefully someone has experience with this and can ease my concern. Thanks! EDIT: It's Tuesday, and the restriction was lifted. However, after a few trades I was getting an error that blocked me from placing day trade orders, saying something along the lines of "You may be flagged as a PDT." Since I knew this wasn't possible based on FINRA's guidelines, I turned off PDT protection and have since had no problems.
Alright you fucking turnips, listen up. Something that I never see mentioned here is the tax implications of all these poor life choices you keep making. Now, I'm not an expert by any means, and I'd like to preface this by reminding you that none of this should be taken as legal advice, but hopefully this will kick off a discussion where we can collectively gather a cohesive base of knowledge on this subject. If any of you see any mistakes in the following text, please correct me and then fuck your own face. This is just intended to be a guide -- seriously, see a CPA when you actually do your taxes. Additional insight is welcome and encouraged. . Capital Gains/Losses A Capital Gain is the profit you make when you buy low and sell high. A Capital Loss is what happens to everyone in this sub. It's important to note that Capital Gains are separate from Earned Income and Investment Income. Furthermore, Capital Gains/Losses are split into two categories: Long-Term Capital Gains/Losses and Short-Term Capital Gains/Losses. Normally, a gain/loss on an asset held for more than a year is a Long-Term Capital Gain/Loss, and a gain/loss on an asset held for less than a year is a Short-Term Capital Gain/Loss. Long-Term Capital Gains are taxed at 15% and Short-Term Capital Gains are taxed at the ordinary income rate (at least 28%). Also, your Capital Losses can offset some of your Capital Gains for tax purposes but seriously see a CPA about that. . The Wash-Sale Rule Under the Wash-Sale rule, you cannot deduct a loss if you have both a gain and a loss in the same security within a 61-day period (calendar days). However, you CAN add the disallowed loss to the basis of your security. Once again, see a CPA about this. It's not going to affect most of you, but just don't think that you can get a tax break by selling shares and then re-buying them at a lower price for a "loss". Remember: Everyone is smarter than you and you don't have any good ideas. . The 60/40 Rule This is your Jesus, here to absolve you of your taxes and turn payments into profits. The 60/40 rules stipulates that 60% of your total capital gain or loss will be treated as a long-term capital gain or loss, and that the other 40% will be treated as a short-term gain or loss. However, with this rule the length of time that you actually hold a position doesn't matter. It's a blanket rule for certain types of contracts (regulated futures contracts, foreign currency contracts, and non-equity options (on debt, commodities, currencies, and stock market indexes (this is important, it's the difference between SPY and SPX (SPX is an index, SPY is not)) that are marked-to-market in trading). To reiterate, the reason that this is so amazing is because long-term capital gains are taxed at 15% and short-term capital gains are taxed at the ordinary income rate (at least 28%). . Two Percent Limit If you don't qualify as a trader to the IRS, you can deduct investment expenses and other miscellaneous itemized deductions only if they add up to more than 2 percent of your adjusted gross income. Say it with me: See a CPA. . Now, onto the things that would directly affect you if you weren't terrible at this: Day Trading Edit: This will not affect any of you, but it's important information to learn about in the event that you one day (somehow) make a career out of this. Once again, this is a guide, not advice, and do not do any of this without consulting a professional.credit to WhatsToBeSaidNow Day Trading. Most of you here know what it means to be flagged as a PDT (Pattern Day Trader), but for anyone who doesn't, please refer to FINRA and Wikipedia. If you meet the IRS qualifications for being a trader then you can fill out something called Form 3115, Application for Change in Accounting Method, and tell the IRS that you want to use the mark-to-market election in calculating your capital gains and losses. This basically means that instead of tracking your capital gains and losses, you "sell" your portfolio at the end of the year and "repurchase" it at the beginning of the new year so that all capital gains fall into income. This is a big deal because converting all of your capital gains to income means that your trades are no longer subject to the wash-sale rule and the two percent limit. This means lower taxes and less paperwork. In addition, you now can deduct 100% of business expenses regardless of your adjusted gross income. However, you no longer able to get the 15 percent rate on any long-term capital gains from your trading activities. Unless you work with listed options on market indexes (these are your SPX options homie), which are considered to show profits that are 60% long-term/40% short-term capital gains, you may not have any long-term capital gains from your trading activities. . These are just the basics. You can also trade from an IRA to avoid taxes on your trades and funnel money through a bunch of offshore shell companies and swiss bank accounts so that you can finally get your name in the paper. There are a lot of complicated rules involving trading and you would do well to see a professional at tax time. However, this information is important for guiding your trading decisions now so that you can factor in the tax costs to your potential profits (from your siiiiick $100 SPY puts). TLDR: Consider the benefits of Cash-Settled Index Options instead of non-leveraged ETFs.
According to this, you need 25k in equity in your brokerage account to not have the PDT limit. Later it says this can be cash or securities. Does this mean I could just be investing $1,000 at any one time in the market, and have $25,000, for example, just sitting in my RH account doing nothing? Thanks.
I've read http://www.finra.org/investors/day-trading-margin-requirements-know-rules about the limits of 3 day trades every 5 trading days. However, it didn't seem clear to me whether or not the limit is per account? Say I have two accounts, one with Robinhood, and one with Etrade. If I do a day trade on my Robinhood account, would I also have to keep that current count in mind when trading on Etrade? Thanks
I have a bit of confusion about day trading. Unknown to me were separate rules for Pattern Day Traders. I am fairly new to trading and don't plan to day trade for a while, if ever, but wanted to make sure that I'm understanding this classification correctly. Here are some questions and example scenarios:
I didn't see any mention of extra fees (other than broker) if you are considered a Pattern Day Trader. Is this correct also? The only requirement I noticed was that you must maintain $25,000 in your account.
Is the number of trades per day limited? Could I buy and sell 100 times in one day and be safe? It sounds like 4 out of 5 days is the key requirement.
Maybe a dumb scenario, but if I day trade Mon-Wed and do nothing Thurs-Friday, that's OK right since it's 3 out of 5 days?
I'm excited for Robinhood Instant and I read their FAQ which led me to this article: http://www.finra.org/investors/day-trading-margin-requirements-know-rules I am new to the stock market and I'm currently playing around with about $1,000. I try and buy several shares of each maxing out my $1,000 and then sell same or next day (AAPL, VRX, DWTI, etc..) I'm reading in the article that if you trade 4-5 times in a 5 day period, you're flagged as a pattern day trader and need a balance of $25,000. Am I missing something here? Is there actually a downside to Robinhood Instant if you're only playing with a small amount of money daytrading?
That feel when Etrade changes your margin requirements mid trade and then sells 60% of your portfolio at the low of the day without notice and you’re just sitting there like wow dude I wouldn’t have held for this week if I knew they would sell for a loss at that point. I already bought the shares..?
Why is day trading only unlimited to cash accounts? Can you still be marked as PDT?
I am having trouble grasping the PDT concept (noobie here). I understand that RH allows you unlimited day trading with cash accounts and 3 trades in a 5 days period for margin accounts. Why is it that cash accounts are allowed unlimited day trades? Is it against federal requirements for me to day trade even with a cash account under 25k? (See quote and article below) Is this because of the margin? "If you exceed your day-trading buying power limitations, your brokerage firm will issue a day-trading margin call to you. You will have, at most, five business days to deposit funds to meet this day-trading margin call. Until the margin call is met, your day-trading account will be restricted to day-trading buying power of only two times maintenance margin excess based on your daily total trading commitment. If the day-trading margin call is not met by the fifth business day, the account will be further restricted to trading only on a cash available basis for 90 days or until the call is met." http://www.finra.org/investors/day-trading-margin-requirements-know-rules Thanks everyone!
The day-trading margin rules address this risk by imposing a margin requirement for day trading that is calculated based on a day trader's largest open position (in dollars) during the day, rather than on his or her open positions at the end of the day. Until the margin call is met, the day-trading account will be restricted to day-trading buying power of only two times maintenance margin excess based on the customer’s daily total trading commitment. If the day-trading margin call is not met by the fifth business day, the account will be further restricted to trading only on a cash available Avoid Trading Using Margin as a Newbie. Most day trading accounts offer a margin from your broker to cover day trading expenses. The ratio of this margin depends on your broker, but most pattern day traders are offered a 4:1 intraday margin. That means on a $50,000 trading account you have $200,000 of buying power available. The maintenance margin requirements for a pattern day trader are much higher than that for a non-pattern day trader. The minimum equity requirement for a pattern day trader is $25,000 (or 25% of Day trading defined - Day trading calls can only be met by depositing cash or fully paid-for securities, or by selling non-marginable securities. Funds deposited in an account to satisfy If a day trader exceeds the buying power limit for day trading, a margin call will be issued and trading will be limited to two times buying power.
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