buy 200, sell 100, keep 100 over night…is it a PTD?

Discussion in 'Trading' started by AlmostGotIt, Mar 22, 2008.

  1. ive been doing some research on this, cant find good answers though, the material is too dry and vague...

    if you were to buy 200 shares, and then sell 100 of them the same day, and keep the second 100 overnight, does that qualify as a pattern day trade?

    Or what about if you buy 200, then sell them all on the same day, but you sell them in 2 different lots of 100 each, is that two day trades?
     
  2. BSAM

    BSAM

    I don't know if you use IB, but this is from the IB website:


    Overview of Pattern Day Trading ("PDT") Rules
    The NASD and NYSE, as part of a small investor protection agenda, instituted regulations intended to limit the amount of trading that can be done in accounts with small amounts of capital, specifically accounts with less than 25,000 USD Net Liquidation Value. Pattern Day Trading rules will not apply to Portfolio Margin accounts.


    Day Trade: any trade pair wherein a position in a security (stock, single-stock future (SSF), bond or stock option) is increased ("opened") and thereafter decreased ("closed") within the same trading session.

    Pattern Day Trader: someone who effects 4 or more Day Trades within a 5 business day period. A trader who executes more than 4 day trades in this time is deemed to be exhibiting a ‘pattern’ of day trading and is thereafter subject to the PDT restrictions.

    In order to day trade, the account must have at least 25,000 USD in Net Liquidation Value, where Net Liquidation Value includes cash, stocks, options, and futures P+L.

    The NYSE regulations state that if an account with less than 25,000 USD is flagged as a day trading account, the account must be frozen to prevent additional trades for a period of 90 days. IB has created algorithms to prevent small accounts from being flagged as day trading accounts, to avoid triggering the 90 day freeze. IB implements this by prohibiting the 4th opening transaction within 5 days if the account has less than 25,000 USD in equity.


    -----------------------------------------------------------------------------------


    Examples of Day Trades
    -On Monday, 1000 shares of XYZ stock are purchased. Later on that same day, 1000 shares of XYZ stock are sold. This is considered to be a day trade.

    -On Wednesday, 1000 shares of XYZ stock are purchased. Later on that same day, 500 shares of XYZ stock are sold. This is considered to be a day trade.

    -On Monday, 500 shares of XYZ stock are purchased. Later on that same day, another 500 shares of XYZ are purchased. In after hours trading on Monday, 1000 shares of XYZ are sold. This is considered to be 1-day trade.

    -On Monday, 500 shares of XYZ stock are purchased. On Tuesday, another 500 shares of XYZ stock are purchased. Later on Tuesday, 500 shares of XYZ stock are sold. This is considered to be 1-day trade.

    -On Thursday, 500 shares of XYZ stock are purchased in pre-market. In after hours trading on Thursday, 200 shares of XYZ stock are sold. This is considered to be a day trade.

    -On Monday, customer sells short 10 YXX September 2005 90 calls and simultaneously buys 10 YXX December 2005 95 calls (combination order type). Later on Monday, customer buys back 5 YXX September 2005 90 calls and sells 5 YXX December 2005 95 calls for a profit. This is considered to be 2 day trades (one day trade for each leg of the spread).

    -On Thursday, customer buys 500 shares of YXZ stock. Later on Thursday, customer sells 1500 shares of YXZ stock (reversal creates new short position). On Friday, customer purchases 1000 shares of YXZ stock. This would be considered to be 1-day trade.

    Non-Day Trade Examples:
    -On Monday, 500 shares of XYZ stock are purchased. On Tuesday, another 500 shares of XYZ stock are purchased. On Wednesday, 1000 shares of XYZ stock are sold. None of these are considered to be day trades.

    -On Thursday, customer buys 500 shares of YZZ stock. On Friday, customer sells 500 shares of YZZ stock. Later on Friday, customer buys 500 shares of YZZ stock. This is not considered to be a day trade.

    -On Friday, 1000 shares of XYZ stock are purchased. On the following Monday, 1000 shares of XYZ stock is sold. This is not considered to be a day trade.
     
  3. BINGO! Thanks for the help BSAM
     
  4. dsq

    dsq

    if you were to buy 200 shares, and then sell 100 of them the same day, and keep the second 100 overnight, does that qualify as a pattern day trade?"

    that would be a daytrade

    "Or what about if you buy 200, then sell them all on the same day, but you sell them in 2 different lots of 100 each, is that two day trades?"

    that would be a single daytrade also-youre just closing out your open position in the same day.