Pattern Daytrading poll

Discussion in 'Trading' started by hii a_ooiioo_a, Nov 16, 2002.

  1. The pattern daytrading regulations were created by NASD last year, and approved by the SEC.

    These rules restrict the ability of smaller accounts to freely trade in the securities markets.

    The rules require minimum marginable equity of $25,000 in an account to freely trade stocks, and now stock options also.

    An account with less than $25,000 marginable equity is prohibited from closing a position on the same day it is opened more than three times total within any consecutive five trading days. The size of the trade doesn't matter. Three $50 daytrades will result in the same restrictions as three $20,000 daytrades.

    The rules have recently been applied to the "long" purchase and sale of non-marginable stock options. The purchase of stock options deducts from the margin value of an account, since they are non-marginable. Thus an account with more than $25,000 may find itself subjected to the "pattern daytrading" restrictions if it purchases enough options to bring the marginable equity value of the account below $25,000.
  2. Magna

    Magna Administrator

    I've yet to figure out what all the ranting, raving, and whining on the ET boards regarding the PDT rule is about. No one is arguing with you. You're preaching to the choir.

    No one here made the rules. Probably no one here thinks the rules should be in place. But the NASD does, the SEC agrees, and that's all that matters. Rant, rave, and whine to them because they are the only ones who can change the rules. Meanwhile, if you want to trade badly enough you will figure out a way to work around the crazy rules. Or you won't.
  3. You agree that these rules are "crazy".
    I posted this poll because surprisingly enough there are a number of people on these boards who have argued in favor of the daytrading rules. You will see by the results of this poll that there are some who will vote for choice #6 or choice #7.

    I have been advocating that we should rant rave and whine to NASD and SEC from my very first posting on these boards. I will post again the addresses I have given in several of my previous posts:

    Anyone else from the choir who would like to join a larger chorus is welcome to join us here:

    Thank you
  4. Does it also apply to the Futures?
  5. Hubert


    no it does not apply to FUTS
  6. Magna

    Magna Administrator

    To be honest my post wasn't directed at you, as you're willing to try and do something about the rules. It was directed at people like qdz who take every opportunity to uselessly complain to anyone and everyone. For 6 months before the PDT rules came into effect there were endless posts on ET and the MSN boards (and presumably SI, Yahoo, etc.) about how, without the small traders, liquidity would dry up, etc. In short, alot of silly, wishful thinking. Are the PDT rules unfair to the little guy? Of course. Are they going to be revoked now or in the foreseeable future? No. Is that reality? Yes. Best for the qdz's of the world to deal with it. Or continue to uselessly complain to other traders....:confused:
  7. It does not apply to Futures because Futures are classed as Commodity. Stocks and Options are classed as Securities, which are governed by the rules of NASD (National Association of Securities Dealers).

    The recent introduction of Single Stock Futures has created two new exchanges which are both hybrids of Security and Commodity exchanges. The possibility exists that this cross-breeding of Security and Commodity exchanges may eventually result in the daytrading restrictions being extended to Single Stock Futures, and perhaps onto other Futures after that.

    I'm not saying it will happen. But it could happen.

    No one thought these restrictions would be applied to stock options for a whole year. Then suddenly one month ago without notice they began being applied to stock options.
  8. qdz



    I am not consider this is useless just like I don't think I am complaining to other traders. What I say (or type) here or to NASD/SEC/Politicians et al. will be evidence in court and/or congress investigations in the near future. So traders, believe me we can make a difference, if not tomorrow but sooner than later.

    Of course, before that happens, I use my story to suggest you to work around the rules carefully to not get hurt. Never let big players and market makers take advantage from us by some rules. We small traders are supposed to take advantage from them! Move in and out with a plan and manage the risk. Hedge our positions. Make full use of 3 day trades in 5 days.


    Good job. Thank you so much. I wonder your poll questionnaire should allow multiple answers, i.e. taking check boxes. Maybe this site does not support that.
  9. Qdz actually made the suggestion of posting a PDT poll here, and I responded by creating this one.
    He is doing what he can in his own way. He has written to NASD and SEC, and is trying to keep the issue alive in the hope of encouraging others to join in protest to NASD and SEC.

    If the endless posts before the rules were adopted could have gotten more people to make a unified protest, especially to the SEC during the Public Comment period, perhaps just maybe the negative feedback would have held some weight in their decision process.

    It's never too late to start giving them feedback, because who knows where it will really end? It doesn't currently apply to Futures, but who knows that it won't eventually be extended to Futures. We didn't think it would apply to Options either. The less protest the regulators receive, the more likely they will continue to place more and more limitations on the public's ability to trade.
  10. Only one answer is allowed on the poll. I included the "All of the above are true" choice to allow for multiple response.

    If you don't think the first 4 choices are all true, but more than one are, vote for the one which you think is most significant.
    #10     Nov 16, 2002