With all due respect, " a cash account"? So with $2500 account one should wait till funds settle 3 days to be able to place another trade? Or you are suggested they only trade penny stocks? WTH.... Also, the brokerage accounts have zero risk with debit and credit spreads, it is all automated, especially on think or swim, no risky naked options can be executed. If anything, this PDT rule causes tremendous losses by forcing traders to hold losers into overnight gaps, or preventing them from taking a profit when it is presented. No one has adequately rationalize this rule which appears unconstitutional, and seems to be implemented at the behest of big banks in 2001 at the height of small trading accounts with many mom and pop broker dealers eating away at Big papa's pockets. This rule, promulgated as a pretext of security, is just to crowd out the little guy. This is bogus and we all know. The reason this prevailed so long is there is not a strong enough lobby to crack down at this self regulating body to nix this. This body seems to be sold to the big boys. Peace all.
"Unconstitutional" means that something is prohibited by the U.S. Constitution or one of it's amendments. Which specific portion of the Constitution would prohibit this, the Third Amendment? The 21st? Have you actually ever even read the Constitution?
If there was no PDT then a guy could just get like $5000 and buy like $20,000 worth of penny stocks using RegT. That would be insane. Let's say homeboy longs a 4 dollar stock at full intraday margin, or even one of those triple bear ETF's LOL Then the stock drops 30%. Well, all of the sudden homeboy's account is debit something like $1,500. The clearing firm ends up taking the loss because he walks and says "sue me" or whatever. Basically, if you can't even scrape together 25k then you shouldn't be trading and the stock broker shouldn't have to extend a cash margin loan to you. I think it actually protects the stock brokers. Basically, it means that brokers don't have to give margin loans to underfunded accounts. It's a credit risk.
The same way labels on car batteries protect us from drinking the acid? I dunno. Its America man.... we make rules affecting millions due to the actions of a few. Wait till the dust settles on Covid, we're gonna have a whole new plethora of stupid rules to bitch about.
Then just remove margin on sub 25k accounts. The goal here is to remove the 3 limit and 3 biz day fund settlement. That's it. I honestly don't understand why transactions handled electronically require 3 days to settle. That makes no sense to me. The exchange that allows for fast transaction and verification via margin should be applied to cash accounts.
Stocks have been T+2 since 2017, options and FOPS and T+1 and futures are same day settlement. I'm not aware of anything thats T+3.
THEN LET US DAYTRADE OPTIONS WHERE THERE IS NO BORROWING INVOLVED! WHAT, YOU WORRIED THE OCC WON'T CLEAR THE TRADES, IS THE THE SO CALLED BIG RISK?? WHOLE THING IS A SCAM.