Let's say I buy 10 shares of XYZ on Monday, and then buy 10 more shares of the same stock on Tuesday morning. If I then sell 10 shares of XYZ on Tuesday afternoon, would they consider it to be a day trade? My logic tells me that the sale would be attributed to the 10 shares I had bought on on Monday, and not the 10 shares I had bought on Tuesday morning; therefore it wouldn't be considered a day trade. Is this correct?
could anyone point to where i might find the answer? Could or should I call the SEC? It seems like this would be a fairly common conundrum.
It is usually better to chat with your broker. Also you need to read a basic book about the financial indusrty. Larry Harris is best and HTMMIS by WJO'N could be helpful, too.
I think you would have an option to sell either the shares boaught on Mon or Tuesday. I could be wrong of course.
from wiki: If you buy the same stock in three trades on the same day, and sell them all in one trade, that is considered 1 day trade. If you buy in one trade and sell the position in 3 trades, that is also considered 1 day trade. Three more day trades in the next 4 business days will freeze your account (you can only close existing positions) for 90 days, or until you get $25,000 cash into your account, whichever comes first. This also applies to options.
Here's what my brokerage said about it: "If you buy 10 shares of XYZ on Monday and another 10 shares of XYZ on Tuesday, the sale on Tuesday would be considered a round trip day trade. The Securities Exchange Commission (SEC) and Financial Industry Regulatory Authority (FINRA) require all FINRA affiliated broker-dealers to be compliant with the revised FINRA Rule 4210. Pursuant to FINRA rule 4210, accounts identified as pattern day trading accounts must maintain a minimum of $25,000 in equity. Pattern day trading is defined as executing four or more round-trip trades (day trades) within any rolling five-business-day period, provided the number of day trades represents at least 6% of the total trading activity during that period. A day trade will consist of purchasing and selling or selling and purchasing the same security in the same day within a margin account. Long securities held overnight and sold the next day prior to the purchase of the same security, or a short security position held overnight and purchased the next day prior to a new sale or purchase of the same security are not considered a day trade. Buys and sells within the pre-market or extended-hours session will be tracked and considered when determining day trading activity for that day. You can view the complete copy of the day trading rules on the FINRA Regulation Web site at http://www.finra.org. Margin trading increases the risk of loss and includes the possibility of a forced sale if account equity drops below required levels, regardless of your intent to cover the call. Margin is not available in all account types. Carefully review the Margin Handbook and Margin Disclosure Document for more details. You will find copies at: https://www.tdameritrade.com/formsbyalpha.html#M"
I disagree with the restrictions to begin with, but it seems absurd to consider it a day trade when a trader sells just a few of the shares he has stockpiled throughout the weeks or months, or years- just because he happened to buy a few shares earlier in the day. Is it really that different or is he more dangerous to himself and society, if a trader were to sell a few shares first thing in the morning, before he buys some? Why is such a big deal made about doing it the other way around? Why the do they put restrictions on day trading for accounts under 25,000? It seems to me like it should be the other way around, and the government should protect(restrict) people who have more than 25k in their account to prevent them from destroying it.