I think the Pattern Day Trading rules are good, Many people who are in the worst way due to layoffs come to the markets as a way to make fast money cause of being out of work. Many will not go to Futures cause of the speed and leavage and lack of knowledge, but everyone thinks they understand stocks. I think the family should come first in the worst of times and throwing it to the winds with little funds and little experience is disaster.
But the risk is no different when holding things overnight. If anything, with the way the market has been the past 6 months or so, holding things overnight is more risky than holding things during the day. But there are no rules against holding things overnight. If the government is going to "step in" and stop people from trading freely "for their own good", then they should do it across the board. Limiting day trades alone doesn't make sense. Either do it across the board, or don't do it at all. And even if you think the family should come first in times like this, is it the job of the government to make that decision? The PDT rules are NOT good. As I stated in an earlier post, my worst losses came BECAUSE of this rule. It did not protect me.
If they want to get into the market, they will find a way. As I've previously indicated, many who trusted the so called smart money managers (who supposedly do understand stocks and markets) now have nothing to show, in many cases, for a lifetime of labor. I agree that family should come first, however, that decision should be made by the family, not the Nanny State.
It seems to make no sense that the rule applies to stocks, but not to futures. And that you pay less on futures trading profits than on stocks due to the 60/40 rule. But when you remember this is the same type of government regulation that got us into the current financial crises, it kinda puts in into perspective. Best Regards, Miracletech
Well, that's why I don't understand why one would choose to trade stocks as opposed to futures, currencies and index options - 1256 contracts. They have many advantages over stocks. If one held a stock for more than a year, it would be all long term gain. Futures and options that are liquid and tradable do not have that long a life. So in a way, it is fair to have a 60/40 rule which marks to market positions held at the end of the year. Which means it would be unlikely that the rule would be eliminated. Might be modified to 50/50.
What other way can a 57 year old man who is suddenly disabled and told it will be two more years before he can collect disability insurance under social security, make a living. It happened to me and daytrading with a 2000 dollar account was one of the luckiest things that ever happened it me.
The PDT rule was written because the MMs would not trade with small SOES lots at their posted prices.. They would dance the fantango raising their shirts and screaming as if they saw a mouse in an attempt to avoid trading, and this made the Nasdaq stocks a lot more volitle, not because of the SOES traders but because of the MMs response to them. Companies were leaving Nas to go to the NYSE because of this MM induced volatility. The PDT rule was a pure sop to the MMs. Their leverage and spread was not enough, they needed protection from the little guys who DID NOT lose that much. So the house had to adjust the rules of the game. If the PDT rule was intended to protect the small investor it would have been a loss limit. Say that a new account below 25K would have an automatic stop loss of 20% of the account. If they need new liquidity they need to eliminate this POS sop.