A Quick Question

Discussion in 'Trading' started by StockApprentice, Jan 10, 2002.

  1. I was wondering about the "new" NASDAQ rule about daytrading... Does it apply to:

    1) After-Hours trades?
    2) Non-stock/equity investments?

    Thanks for the pointers. :)
  2. I don't think the new Nasdaq daytrading rule applies to
    e-mini trading for one... You can daytrade ES and NQ all you
    want! Trying to make a profit is the problem...

  3. Oh, and yes... the new Nasdaq daytrading rule does indeed
    apply to the afterlife, oops, I mean the afterhours...

  4. what new rule?
  5. dgzadok


    "You can daytrade ES and NQ all you
    want! Trying to make a profit is the problem...


    With all due respect, I daytrade the ES exclusivley, and make
    quite a substantial profit :D

    Trading is trading... the vehicle you use makes no difference (with a few exceptions regarding liquidity, etc.).

    Happy Trading to ALL!

  6. dgzadok



    They are referring to the new Pattern Day Trader $25,000 equity rule...

    Basically, if you have less than $25,000 in your account, you cannot use margin to make more than 3 daytrades in any ROLLING 5-day period.

    If you do, you will no longer be able to trade with margin, and all transactions will carry the normal T-3 settlement.

    Take Care & Happy Trading

  7. faction


    Pardon my ignorance, but I was to the understanding that the $25k rule eliminated any and all trades after the initial three, not just those on margin. Am I mistaken?

    Cheers. :)

  8. dgzadok




    if you do more than 3 daytrades in the 5 day period, you will then be restricted to trading on a CASH-ONLY basis, and thus be subject to the T-3 settlement...

    this of course is unless you bring your account equity up to the required $25,000 by either depositing the funds, or simply building it up through trading profits

    i.e. let's assume that you start out with $10,000... most brokers will allow you 4:1 margin for daytrading buying power, so theoretically, you could day-trade with $40,000 up to 3 times in any rolling 5 day period.

    However; if you do the 4th day-trade, you will receive a margin call requesting that your account be brought up to the $25,000 equity.

    If you do not meet the margin call, your account will then be suspended for margin trading...

    you are now limited to trading with only the CASH equity in your account, and any profits from trading will NOT reflect in your buying power for 3 days...

    In other words, you can trade with your original $10,000 as much as want to...

    but keep in mind, if you buy $3,000 worth of stock this morning, and sell it this afternoon for a $300 profit, you will not see that reflected in your account until 3 days later...

    until then, you will only have $7,000 to work with, and you will not have any margin buying power...

    hope this helps :)

  9. Dave,
    Where did you find out all of this info? I would really like to check it out for myself. I haven't been able to read anything that was of much help/detail yet. Thanks for the help!
  10. dgzadok