Already did. Index futures, Index options, currency futures and spot, etc. Most of which have special tax treatment which should at least cause serious consideration. Stock day traders pay short term capital gains tax which is taxed as ordinary income. Index futures traders and currency traders pay a special rate called the 60/40 rule. 60% taxed as long term capital gains, and 40% taxed as short term capital gains/ordinary income.
I gave a number of solid logical reasons why it's bad in my SEC letter that I posted in this thread. To sum them up: 1. Increases risk of account suspension in position traders taking multiple positions in the same day; to avoid this risk, position traders can't place appropriate stops on the day of entry 2. Encourages poor risk management by encouraging traders to hold onto losing positions as to not use up a day trade 3. Encourages traders who may not be able to afford the 25K to take on debt to reach this limit 4. Does not fulfill its original intent of decreasing risk of loss, as the wild swings in the market this year have resulted in stocks gapping up and down significantly....risk of overnight holds is greater in this market environment 5. Psychological effect of encouraging trade obsession (the "wanting what you can't have" effect) 6. Doesn't allow beginning trader to effectively learn by starting with a small amount of money and taking small positions...increases the risk of big losses in the beginning trader who starts right away with $25K
All completely subjective, speculative and unsubstantiated. Not one of them is "solidly logical" for that reason. Yet the perils of each item you listed can be avoided if one employs reason. That doesn't mean that they are wrong or bad, but that they can be countered with equally subjective, speculative and unsubstantiated claims. Like I said, the rule, like many other rules, doesn't lend itself to "solid logic" (whatever that arbitrary classification means). The rule was made to foster a certain perception that is known to have some tangible beneficial effects at the expense of not being able to please everyone. As is the case with most rules. The SEC is likely never to repeal the rule. Especially for the sake of a relative few who fail to fully explore the alternatives which the rule doesn't affect. It would give the wrong signal to the investing public at large. What's more, small account daytraders would lose their accounts yet again in the next bear market or a high volatility stretch, the media would make note of it, perceptions that the stock market is a Vegas proxy would fly yet again, and in the end the SEC/NASD would have to reinstate the rule thereby making it self-fulling. Call it Draconian. Call it unfair. Call it knee-jerk. Call it un-American. But you only have yourself to blame for it affecting you as, and I said it before, you have superior alternatives for which the rule has no jurisdiction.
The rule is complete BS. There is not good reason to have it. Everyone says it is to prevent small accounts from blowing up. So blowing up large accounts is okay? If you don't have 25K in the account but do not break the rule, aren't you restricted to using 2x daytrading margin? Yet when you go over 25K, they give you 4x daytrading margin. I assume this is done so that you can blow up that 25K account even faster.
Lot of rules are BS. Learn to navigate around them instead of moaning about them. Short list of BS capitalism violating rules... 1. Uptick rule for shorting. 2. Arbitrary position limits. 3. Fines for excessive messaging on Globex. 4. Arbitrary trading collars. Etc... There's always something to complain about. Professionals don't complain, they adapt. .. or lobby.
Nice blanket statement, but if you're going to make such a claim, you should show why they are speculative. For example, it is a distinct possibility that a position trader could get stopped out of 4 positions the same day he enters them on an unexpected market turn. If you don't think that is possible, then please explain. Well, of course they can all be avoided, but not without serious alterations in approaches and strategies that hamper the small account trader. Then please offer up your counter-claims. Certainly, the rule fosters a certain perception, but I'm pointing out the perception is flawed in and of itself. I have fully explored other alternatives, which is why I'm moving to trade with a prop firm. But that doesn't mean I won't stop speaking out against the rule, whether my complaints are heard or not. I will always speak out against things that I find completely absurd, which this rule always will be....there are better ways to protect small account traders if that is the purpose of the rule. But INVESTORS have been losing their shirts this past year. There are people in mutual funds and 401K's who have lost half or more of their money. I don't see the SEC stepping in to stop these people from investing. You did hit a good point about the media. The media thrives on sensationalism, and there's something about the risk of day trading that catches the media's attention that investing does not, even though investing can carry just as much risk as what was shown in 2008. Those would all be subjective arguments against the rule. Note that I made none of these arguments.
Then they could simply change the rule. Change it so that you're cut off from trading for a week and all your positions are liquidated when your account drops by a certain % in a day. This would fulfill the intent of stopping people from blowing out their accounts in a short period of time. Yes, the % number would be arbitrary, but it's certainly a better system than calling someone who does 4 day trades per week a "pattern day trader" (when a true day trader makes dozens of trades per day).
That site you quoted is wrong. If you're in a cash account (on the majority of brokers) you can make as many daytrades as Reg T will allow you to make and not have any problems. If the cash you have (in a non-margin account) and the size/type of trades you're making allow you to make 6 day trades in one day without violating Reg T then PDT won't affect you.
There it is right there my friend, you're speculating on an possibility. One in which can be avoided. It's not a blanket statement, it's a fact. You can't substantiate one iota of your six claims because they defy objectivity if for only the language used. Hamper? No. We all trade within the context of rules and we strategize accordingly. The gripes against hold no water. Nor do they engender sympathy given that there are other alternatives and that one doesn't HAVE to day trade, swing, or position trade stocks. That's what I'm trying to avoid - avoid more subjective assessments about the rule. But it's obvious that subjective counter-claims can be made and have been. Facts is, all arguments brought to date against the rule are not only subjective and self-serving, but weak. That's why the rule persists. Flawed according to you, myself and others with no incontrovertible proof that it actually is. It just doesn't "seem" sensible and appears arbitrary and political to us. Sumbit to the SEC, you local congress persons, and the NASD a proposal that outlines the better way, all the while appreciating their desire to protect the perception of the stock markets. You're invariably going to disenfranchise some group who likely will find your proposal to be subjective, arbitrary, and lacking "logic." That's the nature of these things. Mostly, except for precedence, the rule is irrelevant. It hurts no one except the inflexible and uninformed. So really, what's the point of crusading against it? It'll never hurt anyone destined to succeed in trading. Think about that for a moment. You've already taken a step in the right direction by exploring an alternative. Trading success takes dedication. The fact that you've taken the initiative shows dedication. Keyword: investing. Has a different connotation than the word "trading." The public has built up in their mind (thanks to the media, academics, and lousy traders) that "trading" is bad and "investing" is good. If you lost money "investing' there's a laundry list of people to blame... and sue. You're a victim. As there are a dizzying array of persons responsible for exercising due diligence on your behalf. Lose money in trading and you're the fool, the social pariah, and gambler. And the media will paint you as one of those types responsible for other people being affected by your exploits. Of course they are. It's impossible to come up with an objective argument for or against. But many who keep railing against the rule using such similar terms may or may not understand that fact. That's why I'd rather see stock traders explore their alternatives. Most have no idea that viable and lucrative alternatives exist.