25 k rule

Discussion in 'Trading' started by Zarrar, Sep 28, 2001.

  1. Zarrar


    Is it true that the only changes made from this rule are that one cant short, but you can still long with 2:1 margin, not the 4:1. And that you can buy and sell long positions till you knock yourself out and as many times you want. At least Datek seems to confirm this.
  2. tuna


    well if thats true Datek are going to get alot of business...including mine

    What a shambles on the mytrack help board today. ALOT of people knowing nothing about it. Mytrack has already labeled people PDT's during this week.

    Their policy is cash accnt or margin,,more than 3 daytrades your a PDT, bring accnt up to 25k or your left to only liquidate positons.

    Cash accounts under 25K not PDT,go for your life but t+3
    Margin under 25K not PDT,go for your life long/short and still real time update.

    Its only if you come under PDT that the rules affect you.
    i.e more than 3 roundtrips in any 5 BUSINESS days
    (Weekends don't count as a day)

    Anyone else able to confirm Dateks policy?
    Be nice to think somewhere theres some sanity
  3. fast


    You may not be getting a response because this specific question has already been thoroughly discussed on other threads at this site.

    It seems to me that the new SEC rules are not being interpreted exactly the same way by the various brokers. Given that, it seems the best thing is to be sure you understand YOUR broker's policies. (Does anyone else reading this have other advice?)

    Here is an example of how rule interpretation differs. Cyber apparently only monitors margin accounts to see whether the term "pattern day trader" applies to account holders. In contrast, Scottrade seems to look at the pattern of trades in both cash and margin accounts to identify pattern day traders. (Both firms require T+3 settlement in cash accounts.)

    Representatives of two or three brokers have strongly assured me their firm did not write their rules but instead got them directly from NASD or NYSE. If this was true, I would expect the rules to be the same across these brokers. They are not.

    So far, I give AMERITRADE the award for "Most Confusing-IN-EXTREME Explanation of the New SEC Rules."
  4. Satan


    go here for their explanation:

    here is also a e-mail i sent to them and the response i received:


    i have a question about the new margin rule. i got a paper in the mail from you that says:

    "'pattern day traders' (those who make at least four round-trip day trades within five business days) must keep a minimum equity balance of $25,000 in their account. A pattern day trading account that falls below $25,000, will be restricted to cash transactions until the minimum balance is restored."

    here is my question: right now my account is around $25,000. i know in the past i would have been considered a "pattern day trader." however, i no longer intend to open and close the same position in the same day unless it is for stop loss reasons. i don't think in the future that will happen frequently enough for me to be considered a "pattern day trader." what i'm wondering is, am i still considered a "pattern day trader" because i once was? when do i lose my "pattern day trader" status?

    thank you


    I appreciate the opportunity to respond to your e-mail.

    Customer who day trades 4 or more times within 5 days will be consider
    as a pattern day trader.

    The classification will remain on the customer's account for 90-days.
    Therefore, if you does not day trade 4 or more times within 5 days in a
    90 period the classification will be lifted.

    Beginning Friday morning (Sept 28) the trading patterns of all margin
    account holders will be monitored to see if there are 4 day trades in
    any rolling 5-day period. Once you are classified as a pattern day
    trader you will receive three messages from us:
    A mailbot from Datek informing that your account has been classified.
    Your account status will show that the account has been classified.
    A new message will be displayed in your message screen informing the
    customer that the account has been classified.
  5. sallyboy

    sallyboy Guest

    I'm a little confuse by this as well. Technically it's not possible to classify me as a PDT yet because there haven't been 5 days to check! Thursday I daytraded. Today I only made two trades to close positions. I don't think I'm a daytrader until maybe the end of next week!
  6. There is no confusion.

    The new rules have been in effect for six months now.

    Brokers had to comply by today. Today was the last day.

    If you daytraded more than three times within the LAST FIVE DAYS....

    You are a PDT effective IMMEDIATELY.

    Now you can't trade for five business days.

    If you do it again, you gotta wait another five.

    Now do you guys get it?

    Bucky Lee
  7. sallyboy

    sallyboy Guest

    If I do what again I won't be able to trade for another five days? If I'm over 25K I can trade the same as before Sept. 28th.

  8. sallyboy

    sallyboy Guest

    By the way, the rules weren't in effect six months ago, they were approved six months ago. If they were in effect back then the requirement wouldn't have been September 28, it would have been March 28.
  9. Zarrar


    Accroding to Datek, and this is a repeat, i called them again to clarify since this post was started, they say that you have 2:1 margin if your account is less than 25k, you may take long positions and sell them as often as you like. The only thing you cant do is short. If you had 25k with Datek, you could 4:1 margin, and do shorts. I know several traders with Datek, and they concur with this finding.
  10. Sally,

    Well, then you have nothing to worry about do you.

    PS Brokers had six months to comply. They could have enforced the new regs any time but most chose the last day. You are judged by the last five days. Your trading on Thursday classifies you as a PDT. Congrats.

    Bucky Lee
    #10     Sep 29, 2001