I have been buying and holding some options this week and because of this my balance dipped below the $25,000 PDT minimum. I tried to take a long stock position today and got message " trade refused PDT violation" With my other brokerage I could always take as many long positions as I wanted I just had to be careful when I sold them. I called the help desk at IB and they told me I could close a position but not open any new ones. This seems crazy to me. Why cant I take a long position and hold it as long as I don't violate the 4 day trades in a 5 day period? I had plenty of cash in my account for the trade it was just the below $25,000 minimum.
I understand the rules to be that once you are considered a PDT, then you must keep the min in there regardless. You didn't say whether you were or not. If not, then there should be no restriction. You might want to PM def if you want an answer tonite.
Yes I am sure I am trading as PDT. I think you are right, once your account has PDT designation that account remains PDT. I have heard that brokerages have slightly different interpretations of pdt rules. I wired more funds today so it shouldn't be a problem but it just seemed strange not to be able to take a long stock position. I might have held it for several years??
if i remember correctly, IB never lets you open a new position if your account equity is under 25k, thereby they never allow you the oppurtunity of making that 4th day trade and violating. another broker i had would still let you open positions after 3 but basiacally then you had to police yourself and were resposible to not make that 4th trade and put yourself in violation. essentially IB never lets you get in that situation by not allowing you to open a new position. IB just has a different policy then others. try asking customer service this though! HA! LOL!
"if i remember correctly, IB never lets you open a new position if your account equity is under 25k and you have made 3 day trades,"
IB's implementation is stated on the web site. http://www.interactivebrokers.com/html/retailAccount/stock_margin.html Patterned Day Trader Margin Requirements "The NYSE and NASD have imposed rules to limit small investor Day Trading on US stocks. Customers who have made four or more US stock trades (open and close a position on the same security in a single day) within five business days in their account are considered "Patterned Day Traders". "Patterned Day Traders" are required to hold a minimum of $25,000 in "Equity with Loan Value", and therefore those customers without this minimum "Equity with Loan Value" and who have completed three day trades within five business days will not be allowed to enter another trade. This restriction will remain in effect until five business days from the first day trade have elapsed. " While other firms will let you put on a new long position, IB doesn't want to put in the position of having to rely on its clients for compliance of any regulatory rule. At least with the Universal accounts and SSF's starting up within the month, if you get into this position again, you'll be able to trade the stock future.
Why not trade Prop.? Pay the same in commissions and overhead and get greater buying power and never have to worry about rules like PDT, wash sale, Reg T, Schedule D, etc. Get better technology and customer service,access to bullets,access to conversions that don't affect buying power, and the ability to trade futures, options and equities on an intraday or overnight basis with the same amount of capital that you now have.