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Zecco.com » General Investing » Margin Trading » maximum trading frequency possible ...
Last post 06-04-2008, 11:22 PM by sdkenned. 2 replies.
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  •  06-04-2008, 10:17 PM 30555

    maximum trading frequency possible while avoiding day trading call

    Reply Quote
    Hi, new trader, interested in simultaneous ordering (limit BUY, limit SELL) with extremely volitile securities and curious how many opening and closing cycles I am allowed before the 25k day trade call is initiated.  It sounds like one can open and close 3 positions within any 5 business day period without being flagged.  The call is initiated upon the CLOSE of the 4th postition.  Is this correct?  Can one not even open a 4th position within a five day period if 3 positions have already been closed?  Is this only applicable to positions that are opened and closed within the same day, within a 5 day period?  Meaning, is it OK to buy LONG on Monday, SELL this stock on Tuesday, Buy another stock on Tuesday, Sell it on Wednesday, Buy another on Wednesday, Sell it on Thursday, Buy another on Thursday and sell it on Friday?  The term DAYTRADE does not necessarily apply only to opening and closing positions within a one day period, but rather of short term trading within a five day period?  Certain answers will be much appreciated!

    Cheers,
    S

  •  06-04-2008, 10:32 PM 30559 in reply to 30555

    Re: maximum trading frequency possible while avoiding day trading call

    Reply Quote
    Sigh, I should type up something to cut and paste in every post that asks this...

    Almost everything you described in your paragraph is not a day trade. A day trade consists of buying a stock then selling it - in that order - on the same day.

    Buying a stock and selling it the next day is not a day trade. Neither is buying a stock and selling a different one on the same day. Nor selling a stock and then buying it back. You can do any of these a thousand times a day without hitting the PDT rule.

    Only if you buy a stock and then sell it before the next trading day have you day traded. If you do this four times in a rolling five day business period (with the same stock or four different stocks) the PDT rules kick in and you need to pony up the cash.

  •  06-04-2008, 11:22 PM 30564 in reply to 30559

    Re: maximum trading frequency possible while avoiding day trading call

    Reply Quote
    Many thanks.  Sorry for any redundancy... it is totally clear now.
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