Pattern Day Trading Interactive Brokers

Discussion in 'Retail Brokers' started by lucas991, Apr 5, 2011.

  1. lucas991

    lucas991

    So yesteraday I executed all the day trades I am allowed to do since my account has less than $25,000 in equity. I also read on the SEC website than you can day trade only if the amount of day trades is 6% or less of the total trading activity.

    I asked IB about that and they said that they don't care about the 6%. That they have imposed stricter rules... I think that doesn't make any sense... Do you think its because they trully want to impose stricter rules or because they don't wanna program the algorithm that would prevent users to incurr in PDT?

    Thank you
     
  2. They are protecting your account from getting frozen.
     
  3. Ditto on protecting your account. IB's attitude is that they would rather not screw around with small accounts, but if they're going to offer them at all, then they want them to not suffer from undercapitalization. After almost 4 decades in the business, I respect IB's approach as both practical and moral.

    That's nothing, though. Wait til you see what happens to your margin requirements in the middle of a crash. In the '87 crash the regulators raised shorting requirements from $10K to $100K overnight. In the middle of a huge drop, Wall St. most certainly does not want you participating on the short side.

    Undercapitalization is the bane of all businesses, and trading is definitely a business.
     
  4. zdreg

    zdreg

    'In the middle of a huge drop, Wall St. most certainly does not want you participating on the short side."

    of course wall street wants to keep all the profits to themselves.:D
     
  5. That happened with me, too. Took months and about 5 requests to get someone at IB to send me the form to fill out to change me to non-PDT status so I could continue trading. But as others have pointed out, IB may not want to spend much time on small accounts.

    The PDT rules allow the broker the flexibility to label you a PDT just because they have "reason to believe" you are one. Your trading doesn't need to fit any formula for them to do this.
     
  6. It's the SEC, not IB. IB's job isn't to sit on your money. They would rather you trade it.
     
  7. lucas991

    lucas991

    It's not only the SECOND, as I said, IB told me that they impose stricter rules...
     
  8. lucas991

    lucas991

    It's not only the SEC, as I said, IB told me that they impose stricter rules...