First and foremost, I am not a pattern day trader. I just have a few concerns about this "label". According to http://www.patterndaytraderrule.com/, the term "pattern day trader," which includes any margin customer that day trades (buys then sells or sells short then buys the same security on the same day) four or more times in five business days. Maybe I'm interpreting it wrong but please correct me if I am wrong. My interpretation is that if I buy and sell XYZ on Day 1, same stock again Day 2, Day 3, Day 4, etc, I will be labeled as a pattern day trader? Or is it that I will be labeled as one regardless if it is the same or different stock in those four or more days? (i.e, buy and sell XYZ on Day 1, buy and sell ABC on Day 2, buy and sell EFG on Day 3, etc). I stumbled upon that concern because I was reading up on settlement date which leads us to my second question. I'm reading a lot about people switching to margin accounts to "get by" the settlement period by borrowing from their brokerage to trade while waiting for their funds to get settle. Now personally, I am not an experienced trader, which explains all of these questions I'm having. However, I do know that margin accounts can be risky and dangerous and I want to avoid having one. My alternative, at the moment, is to fund my CASH account with 50k so that I can trade safely and as many times as I want without worrying much about settlement period. Now, will this alternative avoid being labeled as a pattern day trader if I make more than four trades since it is not a margin account? Please advise the above questions. Thank you very much!
If your margin account will be larger than $25K, than there is no worry about PDT. Since you have $50K available, no problemo. BTW Margin account is (from my point of view) better than cash account. You can trade like you have cash account, no one will force you to use leverage - only your own greed can , but since you want to be trader, you have self-control for sure...
First, it is true that you need to have at least $25k in your account to be labeled a say trader with a margin account. Secondly, you can escape these regulation by looking for a broker that does not worry whether you open 4 trades simultaneously in one day. Thirdly, you should use leverage to your advantage.