glider
59 posts
msg #37760
- Ignore glider |
9/1/2005 4:27:32 PM
I'd appreciate if someone could clarify the situation regarding day trading. Specifically, what is "a trade". I've read different definitions. My understanding is the purchase of a stock was one trade, and the sale was one trade. But I copied the item in quotes below from a website which suggests the partial purchase or sale equals a trade.
Thanks in advance.
"Each executed segment of a sweep order qualifies as a trade for purposes of day trading rules. For example, if your buy market or limit sweep order gets executed in 4 segments, that order actually counts as 4 trades, and will subject you to "pattern day trader" status if you subsequentely sell some or all of the shares the same day."
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BigOh
23 posts
msg #37772
- Ignore BigOh |
9/1/2005 11:47:42 PM
I believe the NYSE calls anything that "Prints on the tape" a trade. As for a pattern daytrader, I believe it's defined by four orders executed then covered within the defined time frame. I forgot most of my 24 stuff when I started trading. I think you go to the SEC or NASD websites and search for "pattern Daytrader" and find the definition. I'm pretty sure it's been modified to make more money for the big firms on the street as well.
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lspielman1952
7 posts
msg #37782
- Ignore lspielman1952 |
9/3/2005 12:56:52 AM
The Brokerages do track this stuff -
I was just permitted a one time waiver of this rule - so, I will not repeat.
The basic rule is, if you have less than $25,000 in your account
you can only make 3 daytrades, in a five day period.
Accounts less than $25,000 are only permitted to transact 3 purchase/sales of a stock within the same trading day - 3 times during a rolling five day period.
LS
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Railwhore
69 posts
msg #37783
- Ignore Railwhore |
9/3/2005 3:27:04 AM
Know if I'm a pattern day trader:
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You will be considered a pattern day trader under NASD and NYSE rules if you buy and sell the same stock or option on the same trading day four or more times within a period of five trading days, and this activity makes up more than six percent of your trading activity.
If you meet the definition of a pattern day trader under the guidelines above, you'll see two additional fields called Day Trading Cash Buying Power and Day Trading Margin Buying Power when you view the Balances page.
Day Trading Cash Buying Power: the cash available for you to purchase and sell non-marginable stocks or options intraday
Day Trading Margin Buying Power: the cash available for you to purchase and sell marginable stocks intraday
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glider
59 posts
msg #37792
- Ignore glider |
9/3/2005 11:36:20 AM
Thanks for the replies, but I understand the general rules of day trading. Four trades in a rolling five day period. My question was on the segments of a trade. Again, the quoation reads:
"Each executed segment of a sweep order qualifies as a trade for purposes of day trading rules. For example, if your buy market or limit sweep order gets executed in 4 segments, that order actually counts as 4 trades, and will subject you to "pattern day trader" status if you subsequentely sell some or all of the shares the same day."
As I understand it, if you buy 1,000 shares of a stock, and it's executed in four segments, for example, 250 shares each, you have now reached your limit and cannot sell that day without breaking the rules.
Anybody know if this is correct?
Thanks again.
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da-net
55 posts
msg #37793
- Ignore da-net |
9/3/2005 12:21:53 PM
glider:
FWIW...you are correct partially in your thinking. Most BDs look at your order for 1000 shares that gets executed as 4 seperate trades of 250 share lots as exactly that...4 seperate trades... however they currently only charge for a single trade. One way around this would be to specify All or None, another way is to step into your position over several days. The rules will allow you to liquidate a position if violated but not establish a new position. Again this is at most BDs. Some offshore BDs interpret the rules not so rigidly and even the NASD has multiple interpretations depending on whom you ask.
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