The restart game like in real market :)

harrytrader · Jan 3, 2004

I agree

Quote from hii a_ooiioo_a:

The casino (SEC) had to create a "restart". Why? Because money cannot be consistently pulled out of the air to make everyone a winner.

The PDT rule claims to be to protect the undercapitalized trader from himself. But what it does is protect the "House" from the smaller but damaging possibility of those who have come into the casino with practically nothing, and managing to propel their winnings, so that they remove disproportionate amounts of capital from the game.

Having removed that threat, the PDT goes on to require that any unrestricted player must bring a minimum $25,000 ante to the table.

Then, they give 4:1 margin to those players who bring that $25,000. This is equivalent to the casinos giving bonus chips and free drinks to gamblers. More chance of them losing their $25,000 back to the tables, which gives the house more time for the game to continue.

But after a year, they found that even that was not enough. They found they needed to also include Options in the PDT restrictions. Why? Because options create great leverage without the use of margin. Once again, the damaging possibility that someone could come into the game with practically nothing, and start removing disproportionate amounts of capital. The absence of margin in buying Options means that the options trader is not at risk of being squeezed out of their bets by margin calls.

They had to restrict options trading to protect the house's capital and keep the game going.

Casinos know what they're doing when they make their rules!
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The restart game like in real market :)

harrytrader