You open a position in the morning and by lunch you're up $2/share. You can't close it because you have already made 3 round-trip trades that week. (Or perhaps you already have 2 and you want to save that silver bullet for the next day so you can trade). The next morning it gaps down $5. You lose big-time. Now you're gonna comeback and say... "well, you knew the rules when you opened that position". Yes, that is true. So basically, an individual in the U.S. who's tax dollars support all types of regulatory operations regarding the markets... is not allowed to participate in those markets more than 3 times in a week unless he/she decides to assume huge risk and hold a position overnight. Doesn't sound like a level playing field to me. In fact it sounds discriminatory based on net worth. Like I said, repeal the rule and then let brokers decide. You'll have a half dozen startups if the big brokerage houses don't want the business.
SIG, You are correct: NOT an "inalieanble" right to margin. Broker dealers make that decision within long standing regs. But rather, the "right" to have the government or its agencies regulate with a rational reason for any such distinction as set forth in this hastily enacted but horrendous PDT rule. The rule is not conscionable nor is it reasonable. It does more harm than the alleged good it was enacted for.
If brokers let oddlotters grind themselves down to $0 via frantic trading, they'd be in a legal and regulatory hell. That's the reality.
Like Vegas? Maybe they could put up billboards and cover their ass. "Trading Problems? Call 1-800-Mrg-Call"
No, see your logic does not work. You know "before" you opened the position that you have to hold it. You accepted that risk and bought the position. The rule has to cause harm "before" you do anything. Otherwise the harm is caused by the trader, not the rule. See Zany, here is what happened at my firm. We had all these guys come to me and say Mav, I want access to risk based haircuts. I asked them 100 ways from Sunday, you understand the risks of risk based haircuts right? They said absolutely I do Mav. So I give them access. They blow out their accounts. They come back to me and say, Mav, how come you let me blow out my account? Why didn't you stop me? I said, I did. I tried to warn you "before" you opened the account. What happens after is YOUR doing, not the firms. And there in lies the rub. Traders don't want to own their actions after the fact. In your example, you knew the risk of the trade and you put it on. Then after you get a bad outcome, you blame it on the rules, and not the trader. If you want to see this in real time hop on over to any of the topstep trader threads. There you have guys who KNOW the rules before hand. Pay up to enter a combine. Then after their OWN bad trades, they blow out. And what do they do? They blame the rules. The rules this, the rules that, it's not me, it's the rules they cry out. And again, in order for PDT to be ruled harmful it has to cause harm "before" the fact. You can't blame PDT for your own bad trades and that is precisely what traders do. And round and round we go.
oops. did you just say small traders don't have enough resources, and therefore should be underserved?
Well, lets make no mistake here. In the spirit of the thread, I agree he's gonna have a difficult time proving damages. My point is, the rule should not exist. Period. Its a f'n nanny-state rule. The argument several here have put forth in favor of it is it would swamp the brokers with customer service calls from idiots. I agree. But lets let the brokers make their own rules. Let the startups happen. Square is a good example of this in a totally different niche. But its still a good example. I know people who have 480 credit scores that are making a living using Square. Thats a good thing. If a grown ass'd man is willing to lose his $5K daytrading... why should he be limited to only three trades per week? Thats f'n ridiculous. Its a free country. The NYSE and NASDAQ should be available for all... We all pay for it.
I can't disagree with that. We should also be able to trade CFDs and bet on anything we want and buy beer in MA before 10:00 on Sunday damn it!
Got to say i agree with Van on this one, who the fuck is the government to tell someone whether or not they are going to make it based on capitalisation, obviously the odds are low under 25k but you could say the same thing about just about any business. If I want to walk into a casino and throw 25k at a hand of blackjack... its legal. But the government has to stop me from playing in the stock market. Yeah ok. If anything they should have stricter rules on the scheisters who advertise 90% win rates and get unrealistic goals in peoples heads in order to fleece newbies into paying for their services.