IB Pattern Day Trading warning

Discussion in 'Retail Brokers' started by NMadson, Nov 7, 2011.

  1. NMadson


    I've had an IRA account with >$25k with IB for a couple of years. I recently opened an Individual account with <$25k with them. I started trying to make some of the basket trade orders I've made in my IRA account in the new Individual account and have been getting warning messages.

    Today I attempted to enter one basket trade order on one ticker with a limit order to buy, a profit-taking sell limit order and a loss management sell stop order. This is the only order I've placed today. I got the warning that this is potential Pattern Day Trade order. Is that just because, if both the buy and sell orders on this ticker were to be executed AND I were to enter one or more other such orders, I could run afoul of the PDT rule? Or is there something about this one trade that, in and of itself, might trigger a PDT designation?

    It would seem as though IB should be able to know whether this trade might send me over the limit if one of the sell orders was executed. I don't see from my reading of the SEC rules on PDT how this one trade, even if both the buy and sell orders were executed today would constitute a PDT.

    Thanks in advance for any light anyone might be able to shed on this subject.

  2. IB has their policy posted on their web page under margin, in a tab that says "Day Trading".

    Basically the rule is that you can't make 4 or more day trades in 5 trading days or you are a pattern day trader...that's a problem for an account under $25K. IB goes a step forward further...they prohibit the 4th trade so that your account doesn't get frozen.

    That said, from what you posted it's impossible to tell where you stand in relationship to the day trade rule, because we don't know what you did in the last 5 days.

    I'd suggest you go to IB's webpage and read up on their policy, and then look at what you've done. I think it will be clear.

  3. NMadson


    The key was the five day period. My trades on Friday hit a cap that will apply until it rolls off next Friday.

    Thanks for your response,