Hi, I'd like to learn more about day trade call. I have day traded a number of times (buy and then one sell once in a day), but I believe by doing that only once per day, I have not exploit its full potential. If I have $5000 day trading power, which ones of the examples below will trigger a day trade call and which ones will not? These are the scenarios I am not sure will trigger a call, therefore I ask. Please bear with me, they are a bit cumbersome. Assume at the start of the day I have no stocks. Each example describes the trading activities in exact sequence within a day. For the ones that trigger a day trade call, please provide some explanation if you could. The account has balance over $25000. (I) If only one stock is involved: (1) Buy $5000 of A Buy $5000 of A Sell $5000 of A (2) Buy $5000 of A Sell $5000 of A Buy $5000 of A Sell $5000 of A (3) Buy $5000 of A Buy $2500 of A Sell $5000 of A Buy $2500 of A Sell $2500 of A (4) Buy $5000 of A Sell $2500 of A Buy $2500 of A Sell $2500 of A (5) Buy $5000 of A Sell $2500 of A Buy $2500 of A Sell $5000 of A (6) Buy $5000 of A Sell $2500 of A Buy $5000 of A Sell $2500 of A (7) Buy $5000 of A Sell $2500 of A Buy $5000 of A Sell $2500 of A Sell $2500 of A (8) Is there such things as keeping the 1st buy for overnight, the rest as day trades? Buy $5000 of A Buy $5000 of A Sell $5000 of A Buy $5000 of A Sell $5000 of A (II) If 2 stocks are involved: (21) Buy $5000 of A Buy $5000 of B Sell $5000 of A (22) Buy $5000 of A Buy $5000 of B Sell $5000 of B (23) Buy $5000 of A Buy $5000 of B Sell $2500 of A Sell $2500 of B (24) Buy $5000 of A Sell $5000 of A Buy $5000 of B Sell $5000 of B (25) Buy $5000 of A Buy $2500 of B Sell $5000 of A Sell $2500 of B (26) Buy $5000 of A Buy $2500 of B Sell $2500 of B Sell $5000 of A Bottom line, what is the formulae for deciding how much day trading power I have left after each trade? Thanks a million!! sleepwell!
I'm not going to analyse each and every of your examples. All of them have at least one day trade, some have multiple day trades. A day trade is defined as: a day trade is any trade pair (2 trades) where a position in a security (stocks, single-stock futures, SSF, bonds or stocks options) is at first opened and then – within the same trading session – closed. If your account has a value of more than 25 k USD is all this not so relevant. If your account is less than 25 k USD you have to be careful as you are not allowed to do more than four of such trades per week. The PDT (Pattern Day Tading) rule is relevant in this case.
Number of stocks traded is irrelevant, what matters is number of round-trip trades. Buy 100 SPY/Sell 50 SPY is one trade Buy 100 SPY, Buy 100 SPY / Sell 200 SPY is one trade
Buy 100 SPY/Sell 50 SPY is one trade Buy 100 SPY, Buy 100 SPY / Sell 200 SPY is one trade[/QUOTE] What matters is the dollar amount of the round trip trades, not the number of shares.
I'm not following you. If your account has in excess of 25K, which you wrote... you don't have to worry about a daytrade call. You have 100K of daytrade buying power. You can buy 5000 shares of a $20 stock and sell it as many times as you want. Your 100K of DTBP is reduced for every open position. IE if you have 2500 shares of a $20 stock and you have not sold any, you now have only 50K of DTBP to work with on another stock. Also, any portion you keep overnight reduces the next days buying power. So if you keep 50K of stock overnight, the following day's buying power will only be 50K. Even if you sell the overnight position at 9:31AM... your broker will only let you trade with 50K that day.
Thanks, but I am not asking about how to count the "number of day trades" or round-trip trades. I think I know how to count that. I am asking how not to trip (or use up) the $5k limit and have the broker limit my trading activity. Allow me to elaborate a little. Since I only have $5k trading power, if I only do this in a day I will be fine: Buy $5000 of A Sell $5000 of A However, take the first example: (1) Buy $5000 of A Buy $5000 of A Sell $5000 of A Just before I try to execute the second "Buy $5000 of A", I usually get a warning message like below: "This order exceeds the current day trading buying power. If the resulting position is closed today, a day trade call will be issued. Day trading with insufficient day trade buying power may lead to a trading restriction on this account." So the questions is: after I buy the second $5000 of A, can I still go ahead and sell $5000 of A later in the day, without upsetting the system? In the past, in a situation like this, fearing that my account will be limited, I usually just let both $5000 buys sit overnight, and deal with them the next day. This sometimes leads to gains and losses, because a lot can still happen after the second $5000 buy. What if I insist on selling $5000 after the second buy. Am I still within the trading limit by doing this?
To vanzandt: Thanks for catching the contradiction. I have $5k DTBP (but not $25k x 4=100k), for example, usually because I also have other overnight holdings, thus reducing the DTBP like you said. I should not have said I have zero stocks at the start of the day in my assumption. I should just say at the start of the day I have $5k DTBP. Sorry for the error! The question is now: how to exploit the $5k DTBP in various ways as shown in my examples, without getting the trading account restricted. PS: I think I made another error, by saying "trading power" initially, I really meant buying power. I think they might have different meaning in the stocks world.
did you even try to google ? ? ? either you are a troll or lack IQ buying and selling the same stock on the same day is a daytrade, do it three times and your account will be locked if you don't have an account above 25K