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Pattern Day Trader question.

  1. My question is if I buy a stock, and than later I sell it in 2 chunks.. Lets say half the position sold in the morning, and the other half sold in the afternoon...

    Now looking at it thru the eyes of the Pattern Day Trade police..
    would that all together still be considered 1 trade, or is that 2 trades?

    the reason I ask, is cause I know the IRS can only see our SELLS not our buys. so in this case 2 sells would register..

    making it look like 2 transactions.
    but ofcourse there was only 1 initial BUY..

    now the SEC is separate from the IRS i know, but its still government, and who the hell really knows how it all works.. well not me atleast.. so simple question I guess...

    is that 2 daytrades or 1?
     
  2. 1 day trade.
     
  3. Pooks, it is two. Do a search on ET; there are detailed explanations.
     
  4. Are u sure?

    What would happen, if you had only 1 trade left..

    and u buy something..
    lets say u stop out for half the position..

    and than u want to sell the rest of it later..

    in your argument, after I sell the rest in the same day, my account would be frozen.

    or.. worse yet, my broker, doesnt even let me make a trade after I pass my PDT .. a PATTERN DAY TRADER warning pops up, I can't overide.

    so in that case, I couldn't even sell the other half of the position, without calling in i suppose.
     
  5. is there a limit to the amount of trades you can make in one day?
     
  6. Do a search there are brokers that will allow you to day trade with less than 25k, they will rip you off on commissions though. Just search my post history I've asked this question before as well. Good luck.
     
  7. Looks like it really is 2.. wow ok, got to boost up that account balance...

    To the poster above this post..

    If u have less than $25,000 Cash in your trading account, You are limited by the SEC to 3 Daytrades within 5 consecutive trading days...

    Example U trade on Tuesday, Wed, Thursday..

    U can't trade again till next tuesday..
     
  8. It's one trade - I just contacted IB, who confirmed this.
     
  9. Thats funny..

    I talked to IB via the chatroom about 20min. ago..

    and they told me its 2..

    CONFUSED WE ARE AGAIN.
     
  10. I can't find anything that covers this example...

    and.. the NASD regulation does not mention it specifically it either..

    it talks about MARGIN BUYING POWER etc...

    with one buy there is no way you are going to exceed that...

    All the data seems to point towards it being based on BUYS and buying power.. not sells..

    so I dont know what that IB rep told me 2... trades...

    it told the other poster its 1 trade..
    so now its really allover the place.
     
  11. Trade futures, forget stocks. No silly PDT rules, more liquidity, more potential.

    Or....put up 5k at a prop firm and trade stocks all day, as much as you'd like.
     
  12. Perhaps you should try IB again and tell them that a rep said the opposite to another questioner (I was talking to Aimee in IB chat, FWIW). Get them to confirm situation once and for all.

    However, I'd be shocked if this was regarded as two trades - that would not make any sense at all.
     
  13. I heard Aimee has a nice rack!

    el surdo
     
  14. Yeah but she also has an adams apple as big as her balls :D

     
  15. Pirate, the person you talked to is notorious for providing this kind of information. It has been such that some of the traders just prefer hanging up and then possibly re-try if certain IB CSRs pick up. Do search, you will get detailed information on the topic.
     
  16. I agree tho, it doesnt seem like it wouild make much sense..

    That liquidating a position, after u have done 3 Daytrades..

    makes u a pattern day trader.
     
  17. bump
     
  18. I bet she would do well working for Ping Jiang @ SAC!
    They are hiring Babe's with Balls.
     
  19. I may (and don't mind) be wrong but I would have thought that case would only be one day trade. Oddly enough I don't see that exact example on the IB web site.

    http://www.interactivebrokers.com/en/trading/marginRequirements/margin.php?p=d&ib_entity=llc
     
  20. Yup exactly..

    I've emailed a bunch of People left and right for this answer..

    It is a big part of my trading strategy with stops.

    I want to use multiple stops at different risk levels.

    I have to admit I find it odd, that no one has personal experience dealing with this or anything like that.
    (maybe a lot of people dont wanna admit they're trading with an account with less than 25grand, I know u guys are out there!, grow some ballz ;-) lol
     
  21. its 2 trades because you pay a commission on each trade...however say you use a platform like scottrade, and your order, of say 125 shares gets filled at two different prices, that still counts as one trade.
     
  22. Well, I just found this...

    " If you are in a position with one entry of 1000 shares and you take two exits of 500 shares each within the same day then this is only considered one day trade. "


    this is from here: http://www.tonihansen.com/blog/2007/08/pattern-day-trader-rules.html
     
  23. It is considered one daytrade...because you only made one purchase. You can sell off in increments all you want as long as you have made just one buy for the day.
     
  24. Some of you are correct. It is exactly one trade. The definition of "trade" is not the transaction itself where you pay commission, but it is the action of initiating a new position. Thus, opening and closing a position within the same day will reduce your "day trades left" by 1. Whether you close it in chunks with several transactions or not is irrelevant to the definition.
     
  25. Most of the brokers “pattern” day-trading calculations are based on the spirit of NASD rules (who has the authority). The rule of thumb is that the number of day-trades depend on how you choose to close the position.

    Example.1: Suppose you bought 1000sh of ABC stock at 9AM; then place an order to sell all of your ABC stocks at 9:31AM. 500sh of sell got filled at 9:31AM; the rest got filled at 1PM. (1 pattern day-trade.)

    Example.2: Suppose you bought 1000sh of ABC stock at 9AM; then sold 500sh of sell got filled at 9:31AM, then sold 500sh at 1PM. (2 pattern day-trades.)

    Example.3: Suppose you bought 150sh of XYZ at 9AM, another 200sh of XYZ at 10AM, another 250sh of XYZ at 11AM—all in 3 separate orders; and then finally sell 100sh of XYZ at 12PM and 500sh at 4:15PM—all in 2 separate orders. (2 pattern day-trades.)

    Example.4: Suppose you bought 800sh of PQR at 8AM; you tried to sell 400sh of PQR at 4:00PM—but only got a partial fill for 200 shares. You got the rest of the fill on the next day. (1 pattern day-trade. It is not 0 or half pattern day-trade.)

    Example.5: Suppose you sold 400sh of MNO at 8AM; bought 700sh of MNO at 4:10PM with 1 order; and then sold 100sh of MNO at 4:30PM.

    Example.6: (Assume you have 800sh of EFG short position from overnight.) Suppose you bought 400sh of EFG stock at 8:00AM, sold 400sh of EFG at 10AM; bought 400sh of EFG stock at 1PM.

    Example.7: (Assume you have 800sh of EFG short position from overnight.) Suppose you bought 800sh of EFG stock at 8:00AM; sold 400sh of EFG stock at 10AM.
     
  26. "Example.2: Suppose you bought 1000sh of ABC stock at 9AM; then sold 500sh of sell got filled at 9:31AM, then sold 500sh at 1PM. (2 pattern day-trades.)"

    BUT. You don't BUY after the second SELL.. so if its viewed like that, you would have to view it as short sell, that is not covered.

    So u're taking it overnight.. therefore it would not be a DAY TRADE?

    ABC BUY 1000 shares.
    ABC SELL 500 shares (1 pattern day trade)
    ABC SELL 500 shares..

    no more transactions, so its like u're carrying the second sell overnight, like a short sell, so it would not be a daytrade imo.
     
  27. Pooks, NASD allows the brokerage firm to reasonably believe the example#2 as 2 "pattern" day-trades even though you may ended up having almost the same time-of-sales and executions for all the shares in example#1 and on example#2. If you want, you can place these trades with your broker next week. You may have also figured out how many (if any at all) day-trades in example#5,6,7.
     
  28. Yes I am gonna give it a try.
    I'll free up 2 trades on Wednesday, and post result than.

    (hopefully nothing great pops up on Tuesday, good chance it will tho :)
     
  29. This is why the cashmoney six niner is totally cool: Whether its one of two trades for Day trading purposes or for IRS purposes good traders understand that the "MAN" is going to charge two commissions on this trade.

    Bust up a 1,000shares the "MAN" will ring the register on you.
     
  30. It's 1 trade.

    Even if it was 2 trades you wouldn't be stuck in half the position because your account got frozen. Once you pass the limit, you're allowed to get out of any positions you'd like, but you can't initiate new ones. I think someone here already alluded to that fact. How you close a position has nothing to do with the rule. A frozen account wil only be blocked from opening new positions.
     
  31. Pooks, if you clearly tag your 2nd sell order as "short-sale", it will be 1 day-trade. Most of the brokers do go by "how you choose to close the position" as NASD allows them to reasonably believe that you are day-trading. However, NASD also allows the client to contact the broker if he/she does not plan to day-trade. It hardly matters what some of us thinks how day-trade should be calculated. It amtters how your broker's system is coded as allowed by NASD/SEC. In a "frozen" account with <25k, you can still close your existing positions. Some brokers try not to let you open a position if it thinks you are about to do 4 day-trades in 5 consecutive business days, but it is not bullet-proof. Some of the brokers can even still let you open a new position in a so-called "frozen day-trading" account provided you meet some criteria.
     
  32. What ever happen to this guy posting his results about this question ????????
     
  33. Haha, I haven't done it yet.
    I had a chance but ended up holding half the position into the close..

    I got 2 trades for tmrw.. maybe it happens.
     
  34. Ameritrade now considers the total number of day-trades as: min{#of_buy_trades, #_of_sell_trades}.

    So, at Ameritrade, if you buy 300 shares in the morning, 200 shares at noon; and then sell 100 shares, 100 shares and 100 shares in 3 different trades; then it is considered 2 round trip trades.