PDT rule

Discussion in 'Prop Firms' started by zg81, Mar 31, 2010.

  1. zg81


    I have a question regarding the PDT rule:

    Say yesterday I had over $25000 in my account and I did more than 5 round trip trades and the balance remained over $25000 throughout the day. And today I didn't make a single trade but withdrew some money and balance fell below $25000.

    Did I violate the PDT rule?
  2. who gives a shit. You're not a criminal.

    You get a freebie as far as I know. Regardless, is your account a cash account? You can do as many as you'd like in a cash account as long as there's an avail. balance / settled funds.
  3. Yes you will have a violation, because they count back 5 business days. That withdrawl that put your account below $25,000 combined with your previous daytrades (more than 3 day trades in 5 business days) creates a violation.

    The PDT rule is disgusting and was pushed on the SEC by DTCC simply to slow down daytrading.
  4. I do not see why the PDT rule is bad. I think they should increase it to 50K in my opinion.

    No one with less than 25K has any business trying to day trade anyways.

    If you do not have sufficient capital you really need to stay far away from daytrading. And 100K really should be the minimum starting point for someone new.
  5. bigpapi


    PDT rule is an example of these stubborn "economists" in government passing laws about something they have no first hand knowledge of.

    Yeah it sounds good "We can't have irresponsible individuals wreck wall st. with their 10 or 20k deposits" but when you think about it, it is worthless.

    So ... you can't "daytrade" 20k, but you can swing trade 20k and lose it in 24 hours? WTF is the difference? The bleeding is slower? So people losing money daytrading is bad for wall st? No. there is always another person becoming richer on the other end.

    A fool with 25k is still a fool. The same goes for the fool with 100k.

    This is one of the stupidest laws ever passed.

  6. spinn


    Arent you the genius who thought the market was tanking today, when it was just closed? How on earth did you get 25k? Im not joking I really really really want to know?

    How do you even afford a computer, or are you in the library, isnt it free there?
  7. Yep, I agree... what right does anyone have to decide to make or lose money... or open any business for that matter unless they can already show they are successful and know what they are doing... or have a certain size bank account before they can open a lemonade stand...

    Or even put their kid in a particular school unless they have a certain IQ or have read a certain number of Shakespeare's works and can quote them... forget that...

    What is the USA coming to when people think they can risk being better.. risk being more than they are... and possibly lose.. what are you thinking those of you who feel this way...

    J. H. Christ... what are people thinking like they have the right to the pursuit of life, liberty and happiness... really... common... :eek:
  8. Also remember not everyone who ends up purposefully or inadvertenly violating the PDT rule is trying to be a career daytrader.

    Often times retail brokerage account holders are home on vacation and want do a few extra trades. They decide to buy 4 seperate stocks or options, then either the market turns and they get out of all positions, or they decide to take profits that very same day and suddenly they have a violation. Often times they make 3 buys as seperate orders and then make one sell trade that same day and now they have already used up their allotment of day trades for 5 business days. If they do make another purchase they are stuck in the position overnight, even if it is not in their best interest. Even customers who normally swing trade occasionally fall victim to this nonsense, especially if they have internet access at work, or thru an iphone or blackberry. I have dealt with customers who have margin accounts with over $100k in them, who have daytraded like crazy, but then decide to make a large purchase (house or business) and wire out enough cash to fall below the $25k threshold and end up in a violation.

    Contrary to popular opinion this rule was not designed to protect the public. The PDT rule was created because DTCC did not want to clear sooo many trades, and tie up the amount of capital that was necessary. They put the brakes on individuals daytrading for their own needs and not for the public interest.

    Apparently the SEC got so many complaints regarding this issue, that they have informed the compliance departments at various brokerage firms why this rule came into effect. This is what one of my firm's compliance officers told me.
  9. very interesting... thanks for posting that... Hope the PDT dies a violent death someday and the SEC staff is purged and remade or whatever it takes to get integrity back into the markets... if ever...
  10. Maverick74


    I'm curious, why don't you guys trade single stock futures? They are heavily arbed with the shares so the spreads are tight. You get 5 to 1 margin, including overnight. No hard to borrow issues. And you can trade them with as little as 2k or 5k in your account.
    #10     Apr 3, 2010