What I never understood about the rule was it was supposively done to protect traders but along with that rule came 4 to 1 intraday margin. How is doubling margin making traders more protected ?
As I understand it the rule came from NASD. I thought it was the MMs and big players tired of one lots jumping in front of them. Cuts down on it anyways. But what do I know? Just love to blame MMs I guess
The more I examine the merits of the rule the more I know it is Punktastic Crap. Look at the leverage you get with trading derivatives..Futures are in my opinion more risky than stocks and yet the same country allows you to ttrade futures right out of the gate. ConfusedI was.. thats why I ended up trading Futures..its more diffcult steep learning curve and the disciplin required is almost too much to bear at first.. but after much bitterness and persevearence.. its the best game in town by a country mile if you like being exposed to the action with huge levarage. (its the huge leverage that works against you whilst learing these markets.... So why put PDT on stocks?....silly medling government orientated officials with thier special interest).
It's an NASD rule, but don't blame the NASD either. Blame the fucking idiot daytraders from the roaring 90's. Whenever they had a losing trade they emailed 14,652 complaints to various NASD officials about all of the scams by the MM's and exchange members that caused them to lose when they knew they were right. The NASD got tired of it and forced brokers to enforce rules that WERE already on the books with a new rule. That's right, you weren't allowed to daytrade stocks to begin with, it was just never enforced. Brokers began enforcing it when the NASD started fining them.
It's simply a private trading firm that provides you leverage. Because of the way it's structured it falls outside Regulation T, which is where you get your 4-1 limit from. When you open an account you become a member of the LLC, not a retail account, so you are outside the pdt rules. It's a pretty common setup in the US, many of the full time traders on this site trade with such firms. You usually need $5-10k minimum to open an account. Some firms will accept accounts from foreign countries.
http://www.schonfeld.com/index.html http://www.gndt.com/ http://www.assent.com/ http://www.brighttrading.com/ These are the firms. Most the firms might require a $25k deposit IF YOU WANT TO GO DIRECT, but call and ask for a list of LLCs that go through the firm which they "recommend." Some of the firms will not "recommend" a specific LLC for liability reasons but will give you a list of reliable ones. At all the above firms (except maybe Bright? it might be more expensive, though gaining access to large large amounts of capital can be done more easily so it's just a tradeoff) you can negotiate $100,000 + in BP with $5k down and $.005/share or under ( don't pay $.005 unless your volume is DICK or youre getting great training).
this really touched base with me for some reason. its not the gov't's fault.... its dumbass people. Do you have any idea the regulations that brokers go through???? its fing crazy what they have to do. every little inch of their sites needs to be looked over to make sure they are doing everything perfectly. so wheres the problem? as i said... people... dumb people. I know i'm not the only one who hears about the traders who sue there broker because they lost money and "weren't informed of the risky" bullshit!!!!!!! Am I seriously the only person who is not completely outraged because of that?????? Regulation is caused by idiots and the gov'ts willingness to grant suits against big corporations because the little guy lost money. btw same thing is surely going to happen to the housing market. give it 10 years and it will be to the point where nobody can by real estate in the nation but the risk. Again the reason is stupid people. I don't know if anyone else heard the story but some couple in i believe cal is suing a real estate broker for saling houses in their neighborhood for less then what those home owners bought the house for thus decreasing the value of said couples house. Who will win? Said couple and once they win it will lead to crazy regulations in the real estate industry. thats it i got my venting out. comment on this please