Wikipedia page has this http://en.wikipedia.org/wiki/Pattern_day_trader If you buy the same stock, at 3 different times in the same day, and close all of that same stock in one trade, that will be considered 3 day trades. The next day trade in the next 4 business days will freeze your account (you can only close existing positions) for 90 days, or until you get $25,000 cash into your account, whichever comes first. This also applies to options.
Literally, what you have written is correct. But, (and this is the big butt that you don't want to hear) it doesn't have to be the same stock.
The market makers are still manipulating stocks. Now it's done by algorithms and HFT machines. There is no need for humans and specialist system in the NYSE. Hence the NYSE is sold.
Who are the five players? DirectEDGE Goldman Knight (but is directly/indirectly owned/owns DirectEDGE with GS)
In my opinion both traders and the market would benefit from elimination of this rule, but elimination might not be beneficial to brokers. I'm not sure. Frankly. I don't understand the rationale behind the rule. I does not make sense to me.
Does this law only apply in USA? I am from UK so if I choose a UK broker that allows me to trade US equities, will I still have to follow this silly rule? If so I guess I can trade CFD's?
Well, this is confusing... http://www.finra.org/Investors/SmartInvesting/AdvancedInvesting/DayTrading/P005906 "Day trading in a cash account is generally prohibited. Day trades can occur in a cash account only to the extent the trades do not violate the free-riding prohibition of Federal Reserve Board's Regulation T. In general, failing to pay for a security before you sell the security in a cash account violates the free-riding prohibition. If you free-ride, your broker is required to place a 90-day freeze on the account."
agreed. Unless your swing trading, Your going to have a hard time making any money day trading 25k, unless your trading penny stocks..