Get around Potential Pattern Day Trade at IB?

Discussion in 'Retail Brokers' started by Relleum, Jan 18, 2007.

  1. Relleum


    I ran out of day trades in my IB account. I get refreshed to 3 tomorrow, but I want to buy *and hold* something overnight.

    IB won't let me put the order in, because if i were to sell it, it would be day trade #4 on the 5th day.

    But i am definitely keeping it. Is there any way around this?
  2. bl7077


  3. Yeah get 25k in your account:)
  4. andread


    or trade something where you don't have the rule
  5. For instance, e-mini's and forex :D
  6. Single stock futures. They aren't the best to daytrade because of the spreads, but its an option.

    Speaking of options, you could also open up another account with them perhaps, have it as a cash account with just a little bit in there, and buy deep in the money options. You'll get the leverage, and as long as you go deep in the money, you should be OK. Make sure the delta of the option you buy is at least .80 .

    As for what to do today, looks like you are SOL.
  7. Can you do a synthetic long option position? Buy an at-the-money call, sell an at-the-money put?
  8. GTC


    Almost all other brokers will let you hold your whole 4th position over night with proper margin since it is clearly allowed by the rules. I guess IB tries to force you to avoid potential PDT by not letting you open the new 4th position if you have already done 3 day trades in a rolling 5 market working days for an account with <25k for potentially more commissions generation purposes as well as to avoid a lot of customer services by less weary users.

    The potential commissions for IB is much higher if you wait for just 4 more days--rather than wait for 90 days in an event you somehow get flagged for 4 round-trip trades in 5 days. Note that IB's margin clerk is ruthless. It may trigger the 4th round trip without your permission specially if the market fluctuates against you even for a short period of time.
  9. Relleum


    IB *does* in fact let you hold your fourth position overnight.

    I know because last thursday i had 3 day trades and i opened a fourth, which is still an open position.

    Not a big deal. In the future, or until i reach 25k, I will always keep one day trade available so that i can open overnight positions whenever the opportunity arises.
  10. There are firms out there that will let you daytrade with less than $25,000 you know. Some are even sipc insured, will allow overnights and have rates competitive with IB. This PDT rule shackles so many people, but there are alternatives.
    #10     Jan 18, 2007