Pattern Daytrading poll

easyrider · Nov 16, 2002

I love the pdt rule. It forced me to abandon stocks and pushed me, whining all the way, into the wide wonderful world of futures.

hii a_ooiioo_a · Nov 16, 2002

All I do is buy calls and puts. I don't write options.

They have subjected the buying and selling of long cash-purchased options to the three trade rule.
Even making three "daytrades" of a single contract each, priced at $.50 per contract (total trading value exercised $150) will freeze my ability to purchase anything else in my account until the five day period is finished.

Futures are not governed by the securities exchanges, they are governed by the commodities exchanges. That's why the NASD rules do not govern futures. NASD governs securities dealers.

hii a_ooiioo_a · Nov 16, 2002

What will you do when they decide to start subject futures to daytrading restrictions too?

How do I know they're going to do such a thing?

I don't. Just like I didn't know they were going to start subjecting long stock options to these restrictions. But they did.

Then what will you have left to run to?

limitdown · Nov 16, 2002

Quote from hii a_ooiioo_a:

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.
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can we get this confirmed, and independently verified from, say, one of the Option's Brokerage Firms like WS Access?

mercedes500 · Nov 16, 2002

Little guys would kill anyway. Dont need the PDT for that.

mercedes500 · Nov 16, 2002

get killed....

hii a_ooiioo_a · Nov 16, 2002

PDT kills them faster

qdz · Nov 16, 2002

Quote from JORGE:

The PDT was not put in place to hurt small traders it is there to protect them.
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But in fact it does.

The SEC has been presented evidence that 90% of daytraders lose, and until you can refute this argument, ranting and raving is only going to hurt your cause. [/B]
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This misrepresent the evidence. most of these 90% of losers had accounts with more than 25K.

The rules are not rigorous at all. Restricting number of trades to solve either problem it is claimed to solve is a fundamentally wrong idea.

hii a_ooiioo_a · Nov 16, 2002

Thank you freshtrader504, I will be sure to forward your comments to the SEC. Not quite sure what good they will do, but on the other hand suppose they couldn't do too much harm

Maybe if enough of us accuse the regulators of being homos it might finally get through to them that their restrictions are stupid?

vladiator · Nov 17, 2002

<i>They increase risk of financial loss to small traders</i>
Are you people serious??? The rules were put in place to make sure small traders DO NOT day trade. The reason it was done is similar to why gambling is restricted in many states.
So in fact, it's just the opposite, they put those rules in place to make sure the small traders don't lose their shirts, and as I said before, the only way the will change the rules any time soon will be to require much more than 25 G. For the same reason.