IB & Pattern day trader rule

Discussion in 'Retail Brokers' started by baller1069, Apr 9, 2009.

  1. Does anyone know if ib strictly abides by this rule?

    I am opening an account with ib and really don't want to deposit 25k with them, I was thinking of only depositing 10k. I will probably be making what would be classified as a pattern day trade 10 times per 5 business days. The rule allows for 5 per 5 days. Will action be taken by ib in this instance?

  2. Lucrum


  3. Yea I have looked there, but I'm just wondering if in practise they actually strictly adhere to it. I live in Canada if that matters.
  4. JackR


    I don't know about Canada but they absolutely do enforce the rule. And if you plan to day trade have more than $25K as you are in violation when you go to <$25, even by a penny.

    Do an ET search for PDT.

  5. cstfx


    PDT does not apply to a Canadian trading thru a Canadian brokerage.
  6. ronblack


    Actually it is 4 trades in 5 days. They are very strict and TWS won't let you open a 4th position because your account will be flagged if you are forced to close positions and it will be frozen for 90 days.

    In reality you can do only 3 day trades with IB in 5 days.
  7. Wrong. It absolutely does. They will shut you down the second your equity dips below the requirement by $0.01.
  8. MTE


    All brokers strictly enforce this rule!
  9. They are absolutely strict about it and it does not at all matter where you live.

    I had a Euro-based account and traded US stocks only infrequently but it was quite fun to see what happened to the PDT flag when my account was fluctuating around the magic 25k USD value due to changing currency exchange rates:
    When an account falls below that limit (and was above before) immediately you cannot do any more daytrades (not just 3 in 5 days or so).
    You have to mail them in order to remove the PDT (pattern day trader) flag then which allows you do to the infrequent daytrades.

    Now here comes the real strange part:
    If your account goes above the 25k limit again (this automatically allows you to do any amount of daytrades) and then falls again (all due to changing currency rates, no money movement from or to account or trading involved) they will refuse to remove the PDT flag again because they say they can do so only once in 90 days!

    Therefore you may be better off if you keep your account balance in good distance below the magic limit.
  10. Why would a firm risk their
    license over your piddly trade?
    #10     Apr 10, 2009