The PDT Rule is old and no longer applicable to this low volatility environment. Plus, the $25k was simply pulled out of thin air and indexed to nothing. This is just another example of big government installing legislation and then not having the resources or the courage to DE-legislate poorly written laws. Funny thing in America today....more laws keep piling up. Where's my De-legislator when I need him ?
NO firm with any risk management is going to let someone without a track record trade larger than 100 share lots. Trust me, you will be shut down once you blow through your deposit.
And when said individual blows through his $1000, what do you think he's gonna do, with all that juicy capital still sitting there tempting him? Also, your said individual would not be able to daytrade his $20k savings down to nothing because the PDT requires him to stay above $25k. PDT is a good rule. Simply the fact that so many people hate it should be enough to demonstrate that. (Teens don't like their parents' rules either, even though they're ultimately good for them.)
pdt is one of the rules that just doesn't make cents (and sense too). i can see how margin requirements protect the customer from her own stupidity, but PDT??? it does more harm than good... jesse "the boy plunger" livermore in the bucket shops, paul "the flipper" rotter, etc...
Because it requires you to stay above $25k, it helps ensure that you won't lose all your capital daytrading. (You're talking about boy plungers and rotters but you need to remember that most people are going to lose money, not make it.)
http://www.nasd.com/web/groups/rule...asdw_000879.pdf The rule is meant for daytraders but will in most cases affect others using holding times below 30-60 days and stops tighter than 2-3%. A few stops triggered on the day of entry over a couple of days is all it takes.
as for protection the money from the new traders just flows in to more high leveraged instruments like futs and forex anyway, so it will be gone even faster. So those protected i would guess people with accounts used for investment but tempted to daytrade.Which was more likely back in the haydays when the rule was enforced.
I always thought they should just tier the leverage you can get. You can put on as many trades as you like but have something like this. 0-5,000 Cash only 5,000-15,000 2:1 leverage 15,000-25,000 3:1 leverage 25,000+ 4:1 leverage