$25,000 Minimum

Discussion in 'Professional Trading' started by YoungOne, Jan 8, 2007.

  1. Hello,

    I was wondering if someone could clarify the $25,000 minimum for day trading. I was wondering if this is for margin accounts only? For example, I have lets say $5,000 and I am going to day trade with that and use no margin. Do I have to follow the no more than 4 trades in 5 consecutive days even though I am not using margin?

    Thanks in advance.
     
  2. doli

    doli

    In a cash account you probably need to wait for a trade to settle before using the proceeds to trade again. So, it could be difficult to daytrade.
     
  3. spinn

    spinn

    Do the pattern day trader rules alos apply to single stock futures?
     
  4. Thanks for the link.

    So let's say I have $5,000 and I buy a stock that is $5 and I buy 1,000 shares. I then sell the same stock for $7 on the same day. So now I have $7,000, I can't use the $7,000 the next day to buy some other stock and just keep on doing this day after day?
     
  5. elit

    elit

    You need to diversify, risk only a small percent of capital on each trade, if you will risk 100% on a trade you will lose 100% if your trade goes bad.
     
  6. Tums

    Tums

    try this example:

    So let's say I have $5,000 and I buy a stock that is $5 and I buy 1,000 shares. I then sell the same stock for $5.05 on the same day. So now I have $5,050, I can't use the $5,050 the next day to buy some other stock and just keep on doing this day after day?
     
  7. I know, that was just an example.
     
  8. You can do this provided it's a margin account. But your broker will eventually flag your account as "pattern day trading" and requires you to keep a $25k minimum balance in the account at all times. So you either have to pony up the cash and take the account balance to $25k or they'll lock your account from trading for certain penalty period.
     
  9. MTE

    MTE

    Not in a cash account cause it takes 3 days to settle stock trades. You need a margin account for this.
     
    #10     Jan 9, 2007