I have a question about just how long it takes before your account gets tagged as a pattern day trader account. Let me explain. I just started trading some of my sisters money from her datek account. She only has a few thousand dollars in it but she wanted me to see if I could make her some extra money. She did not want to put her money in my account so I told her that I would just trade it off and on from her datek account. After 2 weeks of decent trading (3-5 trades per day, all "cash only") the account is still not considered a pattern day trader account. My question is, does anyone know how long it takes before it will become a pattern day trading account? I was also wondering if I was to stop trading with this account right now if sometime down the road it would just pop up as a pattern day trader account. Like maybe it just takes a while for datek to realize the amount of trades and liable it as such. Does anyone know how long I can trade like this before they liable the account PDT? Or if they may just liable the account PDT sometime down the road due to the number of trades that I have already made with the account? Just looking for quick answers. Thanks.
You can trade a cash account as often as you like. The PDT rule only applies to margin accounts as far as I know.
Okay, that's what I thought. So what happens if I want to margin the account? Will they look at my past trades and liable the account PDT right away or does the amount of trades you make only matter after you margin your account?
It doesn't matter whether the account is cash only, such as an IRA, which precludes shorting or using margin, or a regular brokerage account. The PDT rules are quite specific and should be written on the back of yours' and your sister's account statement each month for your info. You can be labelled a PDT in as short as 4 days if you meet the req.; if you haven't been labelled as such you obviously haven't met the req because it is a fed rule and no broker worth his salt will play around here. The basic 'keys' I watch for are trading the same vehicle 3 times in a 4 day period while having less than 25k in my account. What restrictions your broker places on your acct is up to them once you break the rules, that is where it gets interesting. My broker has stopped me from electronically trading a few times but a simple phone call explaining my oversight and that I understood the rules and regs and that I would be a good boy in the future precluded the 90 day rule from staying in place. Just depends on the type of infraction and you past history with them. But the bottom line is being labelled as a PDT shouldn't affect how you trade it's only a label like being a communist or a democrat, just a method of keeping track of your activities for some possibly sinister future plan.
above should read 4 times in a 5 day period. Also should mention in your case since the acct size is below 25k, you will either have to bring the acct size above 25k once labelled a PDT, or stop all your daytrading activities.
PDT applies ONLY to margin accounts and it applies ONLY to the account, not to the person holding the account. If you wish to establish a margin account, then get a new account number and no past history will be considered. http://www.sec.gov/rules/sro/nd0003n.htm
my experience was not with datek I prefer IB for the small number or trades I do for the cost savings but in order to trade actively I need to keep my acct balance over 25K for the 4:1 BP
Depends on the broker. The SEC requires all trades be cleared in 3 days. Mytrack (and I think Datek also, but am not sure) clears overnight. IB takes the full 3 days.
This is how it works with IB, but with Datek right when you close a position they put your money back into your account right away. Here is the heart of my question guys. I have made 28 trades with this account in the last two weeks. All on just 6 different stocks. This is pattern day trader activity. For some reason Datek still has not tagged this account PDT. Now I want to margin her account, so that I can short stocks with her account. She does not have 25k in her account. I am going to stop trading so often ( only 2-3 times per week from now on) with this account. But what I am afraid of is enabling this account for margin and THEN Datek labeling it PDT and sending her a 10k margin call. (to get her account balance up to 25k) Is there any chance that this could happen?