I've just started getting hit with daytrading calls and was wondering if anyone knew what rule this is covered in.. under 25k, Margin accnt on 2:1 lets say we've got 10k in the account and we're holding that long overnite in one security...next morn i close that long...do one daytrade...then go long another stock and end up not closing the last position... I'm getting calls for doing that... Apparently after i close the first long in the morn i can either 1)daytrade or 2)go long or short overnite....but there saying i can't do both and why i'm getting the calls IS this correct???
Yeah, that is true. I don't remember the details, but I'll try to look it up. The general rule I remembered though was "if you hold it overnight, don't daytrade it the next day". Let me go see what I can find...
I really can't go into detail, but I do know that the safe way to play it is to not daytrade the same stock you have an overnight position in. Just treat that stock seperate from your daytrades. The day after you close the position, you can daytrade it. However I think you shouldn't have any problems adding to that position (i.e.- buy 200 Monday, buy 200 Tuesday, sell 200 Wednesday, buy 200 Thursday, sell 400 Friday). That should be OK. With 5,000 stocks to choose from, just daytrade a different one and you should be OK. I used to get hit with daytrading calls and had to fork over another few thousand dollars to cover them. That really can hurt when you don't have a few thousand dollars stuffed in your mattress! Hope that helps, but I would certainly defer to anyone who may have a better response. I do believe the rules change relative to this topic for pattern day traders over $25k.
Thanks for the replys guys,I've got to find what rule this is covered under because the way i had it explained to me was it did'nt matter if it was the same security or a differant one. After you sell in the morn you can either go and a)daytrade or b)do an overnite hold.. a OR b ...not both... and did'nt matter if it was a differant security to what you previously held overnite. I'll go back to my broker on it and try and get the specific rule. Sounds like its an old one their pulling back out huh?. I'd previously never had any trouble,Double Dipping is what their calling it.
tuna.. its called free riding.. if you dont have a daytrade account then your trades take 3 days to settle.. so once you use your total buying power, you have to wait for your trades to settle before your buying power is updated.. the best thing to do is go with a broker that updates your buying power in real time.. even ameritrade and datek will do this for you.. i had southwest securities close an account of mine a while back for this very reason.. i bitched until someone finally explained to me that i neglected to write "daytrade" at the top of my account application.. what a bunch of knuckle heads.. anyway, tell your broker you want your buying power updated in realtime.. if they cant do something so simple for you, fire them.. -qwik
Hi Qwick,It is ...its a margin account 2:1 only and it updates in realtime.. thats why i can't get my head around it. Ok close overnite hold..new bp do a daytrade..close that daytrade ...new bp buy long for o/n hold without exceeding b/p that to me should'nt be a problem as the b/p is there their saying thats double dipping .. I can sell the o/n hold and daytrade I can sell the o/n hold and do another o/n hold What there saying is i can't sell o/n hold....do a daytrade and then buy again and hold o/n.
Hi Tuna I have margin account (under 25k) with IB. I was trying to swingtrade and Short Sell (open trade) one day and⦠Cover (close trade) the next day and then another Short Sell (to open a new position). Bacause there is no Cover transaction with IB, only Buy (used for cover too), Sell & Sell Short , IBâs software counts Cover & Sell Short as one LONG daytrade and thinks that you are âpattern traderâ, and locks your account. How about that!
Hi Miki yeah i've had about 3 false pdt calls put on me too, all thru software problems.Guess they'll get them ironed out eventually. Finally written to Nasd to try and get what rule i'm getting hit with. My broker can't even give me what rule its in. So far sounds like a free-riding rule applyed to a margin account which does'nt seem to make any sense,I thought free riding rules only applied to cash accounts.
Try these articles from the street dot com: http://www.thestreet.com/markets/taleofthetape/1524730.html http://www.thestreet.com/markets/taleofthetape/1525781.html
Hi Max thanks but that does'nt cover any new ground for me... I'm working within those rules...this their throwing at me now appears to be a new angle, from this broker it is anyway. More or less there trying to tell me i can't use my buying power twice as in daytrade then long overnite BUT its ok to go do 2 daytrades..kinda wierd Seems to be only a problem if you start the day with 0 bp and initiate it by liquidating an overnite hold