Day Trading Minimum Account Balance

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Thread: Day Trading Minimum Account Balance

          
   
  1. #1
    dark_knight is offline Junior Member
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    Default Day Trading Minimum Account Balance

    Sorry for the rookie question, but I just want to make sure I'm reading this right. I'm looking to get more involved in day trading rather than long-term holds. While researching day trading rules and guidelines on e-trade (where I already have an account) I came across this:


    "You're considered a pattern day trader if you regularly buy and sell the same security on the same day in a margin account and execute four or more such trades within a period of five business days.*

    Beginning September 28, 2001, the FINRA imposed more stringent margin and other requirements on pattern day traders. As of that date, if you're a pattern day trader, you'll be required to maintain a minimum equity of $25,000 in your account prior to any day-trading activities. You'll also need to open a margin account if you don't already have one.**"


    If I'm reading that right, basically I need to have at least 25k in the account at all times or I will not be allowed to frequently trade. This looks line an industry rule also rather than just an e-trade rule. Any way of getting around this? Are there any brokerages that do not require an account balance?

  2. #2
    hftjmac's Avatar
    hftjmac is offline Member
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    It is a federal requirement that all accounts that execute more than 3 day trades in 5 days time are required to have an account balance of $25,000. There is no way around this other than to only do 3 trades a week.

  3. #3
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    ganeshm is offline Senior Member
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    Default

    You are right, if you have less than 25k in your account you can only make 3 day trades for every rolling 5 day period.

    there are a few ways around this.

    1. Open more than one account with another broker
    2. use suretrader which is an offshore broker that isn't US based so you won't have the PDT rule, but make sure you look into them before you open account, i have heard some mixed reviews on them and am also looking into them.

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  5. #4
    dark_knight is offline Junior Member
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    Thanks for the responses. Suretrader sounds interesting but I will definitely do my research.

  6. #5
    av1atic is offline Member
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    they want "pattern day traders" to have sufficient funds and not blow their accounts up by recklessly trading.

    otherwise:





    http://tradetheticker.blogspot.com/2...unt-avoid.html
    Last edited by av1atic; 04-10-2014 at 03:18 AM.
    unitix and hftjmac like this.

  7. #6
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    Matt0129 is offline Senior Member
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    Hahaha

  8. #7
    ganeshm's Avatar
    ganeshm is offline Senior Member
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    Haha, that meme is great.

    Yeah the PDT rule sucks at first, but it definitely helps to not let you overtrade when you aren't ready yet. Also if you can be consistently profitable and cut all of your losses quick it shouldn't take too long to build up your account to that 25k

  9. #8
    Matt0129's Avatar
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    Yeah i will admit PDT does help you to be more selective and pick trades wisely. Its a love/hate thing.
    unitix likes this.

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