PDT rule = Pattern Day Trader In the USA, if you make more than four trades in a week in which you buy and sell in the same day, you are labelled as a PDT, and you have to maintain $25K equity or the account gets restricted from that kind of trading. There's a little bit more to it, but that's the basic concept. You can google it. It has to do with not being allowed to "recycle" the proceeds from a sale that has not yet settled, also known as "free riding." BMK
I don’t think you can buy inexpensive stocks while using a margin, especially if you’re planning to go long.
Really? Till now I believed that buying on margin increases the purchase power, giving me a chance to increase the financial leverage since I’ll be taking that money from the broker.
Well I completely agree to @morkel635 here. There are brokers who would be willing to help you invest in inexpensive stocks but there's always a chance that the broker could issue a margin call. You would eventually end up liquidating your position in the stock or would need to invest more capital to secure your investment.
Ok got the idea. But the risk factor has always been an attribute of online trading. I mean there are brokers that offer a platform to practice trading offering tight spreads. For instance, I’ve been using Fxview and it has given me access to deep liquidity pools at the lowest trading commissions. Apart from this, there’s IC Markets that gives low spreads and up to 500:1 leverage along with an automated trading option where we can learn from other traders too. But risk is always present.
I believe we do have the option to buy inexpensive stocks using a margin, the point is whether we are willing to take the risk. Let’s not forget that apart from the 50% initial margin requirement, the FINRA requires at least 25% margin maintenance. So in case the stock prices fall below the FINRA level and you choose not to cover the margin call after by contributing the desired amount, the broker can sell your stock without your consent.