PDT rules have destroyed me.

Discussion in 'Trading' started by qdz, Nov 20, 2002.

  1. Nah, he's good to go. If people begin ignoring him, he will just create another alias (not speaking from personal experience).
     
    #81     Nov 22, 2002
  2. You spend your time telling people what they should or shouldn't say on here. Have you actually done any trading yourself yet?
     
    #82     Nov 22, 2002
  3. No, qdz is sincere. He is not the sort to go creating aliases. He speaks his mind honestly and without guise.

    As for me, I would welcome the hecklers to add me to their Ignore list. I wouldn't have to see all these vindictive and adolescent responses to every statement I make.
     
    #83     Nov 22, 2002
  4. When the student is ready, the teacher will appear. Shame is: most students never reach ready.
     
    #84     Nov 22, 2002
  5. bobcathy1

    bobcathy1 Guest

    I am curious, did anyone find out WHY the PDT rule was put into effect? Rules are rarely made without reasons behind them?

    Was it to discourage daytraders?
    Was it try and stop wild daily fluctuations?
    Did the government want to try to put more money in the market?

    Instead of complaining, I have adapted to it.
    I know when I am pissin' into the wind:D
     
    #85     Nov 22, 2002
  6. This explanation was posted on www.groups.yahoo.com/group/DaytradersUnite/

    Basically the daytrading rules came out of the Atlanta massacre when
    the "crazed daytrader" who had lost his money shot up two daytrader
    shops. A senate committee held hearings and so crying wives of men
    who had lost the family "nest egg" daytrading "testified" mainly by
    sobbing in front of the committee. Congress didn't pass a law but
    the NYSE and the NASD proposed the PDT rules we all know and hate
    in response to the aforementioned. If you read the letters of
    comment it is clear that they all knew the rules were flawed but
    they passed them as proposed.

    It is interesting that while the rationale was reduction of economic
    risk to the system they in fact turned most active traders loose with
    twice the buying power they had before. (Most daytraders have more
    than $25K) The remaining restrictions have no clear impact of
    system risk. Why the magic number of four trades in a week? Why
    the misinterpretation of free riding? (It used to apply only to
    trading without depositing any cash, i.e. you make profit in the
    three days to settlement and sell taking profit but the check never
    shows up. That is free riding!)

    Interestingly it seemed to favor the interests of the daytrading
    firms themselves (by giving their clients 4 to 1 margin) and the large
    institutions by keeping some of the small guys out of the way. The
    losers in this were the online brokerages which had most of the
    under $25K clients who trader somewhat actively compared to
    traditional full service firms.
     
    #86     Nov 22, 2002
  7. It sounds like the NYSE and NASD used the situation to get these rules pushed through. I don't think they proposed the rules in their current form just to appease the wives of some unfortunate daytraders.

    They are getting something out of this. Maybe it was just to save their asses, and put a rule in before congress steps in to look at things more closely. But there could be more to it. Who might benefit from these rules?
     
    #87     Nov 22, 2002
  8. I'm by no means a supporter of the PDT rules, but the SEC did offer a response period for public input when the rules were being considered, and from what I remember, the response and opposition to the rules was very minimal.

    Did any of you who are crying and moaning about it now do anything to oppose it back then?
     
    #88     Nov 22, 2002
  9. A. I didn't know about it at the time

    B. When presented for public comment, they made no mention of including stock options in the rule
     
    #89     Nov 22, 2002
  10. bobcathy1

    bobcathy1 Guest

    I knew they were considering it....but I had no idea that my opinion had any weight. And 2 years ago my account was bigger, now I am more close to the bone.....
    Did you know that during the Depression years, shorting stocks was illegal? I think it became legal again sometime in the 70s.....does anyone know?
    So that should give you hope with some pressure that THEY might change the rules.
    Myself, I just changed to futures to circumvent it.
     
    #90     Nov 22, 2002