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.
Yes - For retail, you have to have a margin account with min $25K You can not consistently "day trade" with a $5K cash account. You will end up with a free ride at some point. http://www.nasd.com/InvestorInformation/MarketsTrading/DayTradingInformation/NASDW_005906
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.
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?
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.
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?
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.
Not in a cash account cause it takes 3 days to settle stock trades. You need a margin account for this.