Everyone here must be super rich

I have introduced some friends to trading and am always struck with the absurditiy of the draconian restrictive and in the case of options trading deadly Pattern Day Trade rule that is out there. ( only 3 day trades allowed every 5 days) Effectively, to get around the PTD rule one needs to either have at least 35,000 in their trading account -- (to allow for swings in case of options trading) I can see some sort of day trade restriction for stocks, but for index options that swing all over the map and are a decaying asset its absurd and very anti free market. Just my opinion. Surprised no one ever complains about it here or any other forum I visit. What this also does is if you want to have more than one trading account -- to not have all your eggs in one basket that could go down fro an hour like IB did a while back -- then you need to have at least 70 k avail to trade.

trading is a tough game ...

I have introduced some friends to trading and am always struck with the absurditiy of the draconian restrictive and in the case of options trading deadly Pattern Day Trade rule that is out there. ( only 3 day trades allowed every 5 days)



Effectively, to get around the PTD rule one needs to either



have at least 35,000 in their trading account -- (to allow for swings in case of options trading)



I can see some sort of day trade restriction for stocks, but for index options that swing all over the map and are a decaying asset its absurd and very anti free market. Just my opinion. Surprised no one ever complains about it here or any other forum I visit.



What this also does is if you want to have more than one trading account -- to not have all your eggs in one basket that could go down fro an hour like IB did a while back -- then you need to have at least 70 k avail to trade.

I have introduced some friends to trading and am always struck with the absurditiy of the draconian restrictive and in the case of options trading deadly Pattern Day Trade rule that is out there. ( only 3 day trades allowed every 5 days)



Effectively, to get around the PTD rule one needs to either



have at least 35,000 in their trading account -- (to allow for swings in case of options trading)



I can see some sort of day trade restriction for stocks, but for index options that swing all over the map and are a decaying asset its absurd and very anti free market. Just my opinion. Surprised no one ever complains about it here or any other forum I visit.



What this also does is if you want to have more than one trading account -- to not have all your eggs in one basket that could go down fro an hour like IB did a while back -- then you need to have at least 70 k avail to trade.

I didn't know this rule..SEC or Firm rule. Anyway its always good to be well capitalized so you don't blow out if you have a bad streak.
Also keeps the novices from gambling...This is a very tough business! and it is a BUSINESS. Go to Vegas or the track to gamble.

I have introduced some friends to trading and am always struck with the absurditiy of the draconian restrictive and in the case of options trading deadly Pattern Day Trade rule that is out there. ( only 3 day trades allowed every 5 days)



Effectively, to get around the PTD rule one needs to either



have at least 35,000 in their trading account -- (to allow for swings in case of options trading)



I can see some sort of day trade restriction for stocks, but for index options that swing all over the map and are a decaying asset its absurd and very anti free market. Just my opinion. Surprised no one ever complains about it here or any other forum I visit.



What this also does is if you want to have more than one trading account -- to not have all your eggs in one basket that could go down fro an hour like IB did a while back -- then you need to have at least 70 k avail to trade.

I didn't know this rule..SEC or Firm rule. Anyway its always good to be well capitalized so you don't blow out if you have a bad streak.
Also keeps the novices from gambling...This is a very tough business! and it is a BUSINESS. Go to Vegas or the track to gamble.

Yes but for a new trader it actually causes bigger losses as more is put up to start.



I dont care but doubt seriously eveyone here is a Pattern Day Trader.



My view is this is ani free market.



If its meant to help new investors it should be amended to no more than 3 losing trades every 5 days not just any trades.

I have introduced some friends to trading and am always struck with the absurditiy of the draconian restrictive and in the case of options trading deadly Pattern Day Trade rule that is out there. ( only 3 day trades allowed every 5 days)



Effectively, to get around the PTD rule one needs to either



have at least 35,000 in their trading account -- (to allow for swings in case of options trading)



I can see some sort of day trade restriction for stocks, but for index options that swing all over the map and are a decaying asset its absurd and very anti free market. Just my opinion. Surprised no one ever complains about it here or any other forum I visit.



What this also does is if you want to have more than one trading account -- to not have all your eggs in one basket that could go down fro an hour like IB did a while back -- then you need to have at least 70 k avail to trade.

I didn't know this rule..SEC or Firm rule. Anyway its always good to be well capitalized so you don't blow out if you have a bad streak.
Also keeps the novices from gambling...This is a very tough business! and it is a BUSINESS. Go to Vegas or the track to gamble.

Yes but for a new trader it actually causes bigger losses as more is put up to start.



I dont care but doubt seriously eveyone here is a Pattern Day Trader.



My view is this is ani free market.



If its meant to help new investors it should be amended to no more than 3 losing trades every 5 days not just any trades.

Oh Please...don't give me the anti free mkt! The firms don't have time to handle very small accts.... and have another 2000/2001 day trader Debacle.

have at least 35,000 in their trading account

NASD rule 2520 and NYSE Rule 431 require only $25K. An individual firm could require more. Most don't. I know IB's PDT threshhold, for instance, is $25K.

In any case, it's a bit of a moot issue as anyone who wants to avoid the PDT rule can trade day-trade futures on stock indexes without any limit of any kind whatsoever.

Perhaps the reason that one rarely sees any complaints about the PDT rules is that a possible complainant doesn't want to admit that he/she is trading less than $25K. More likely most of them are trading futures.

have at least 35,000 in their trading account

NASD rule 2520 and NYSE Rule 431 require only $25K. An individual firm could require more. Most don't. I know IB's PDT threshhold, for instance, is $25K.

In any case, it's a bit of a moot issue as anyone who wants to avoid the PDT rule can trade day-trade futures on stock indexes without any limit of any kind whatsoever.

Perhaps the reason that one rarely sees any complaints about the PDT rules is that a possible complainant doesn't want to admit that he/she is trading less than $25K. More likely most of them are trading futures.

I'm pretty sure the rule applies to futures too...but I'm open to being corrected.

Edited by Teaparty, 15 January 2008 - 08:26 AM.

5,000.00 < you can trade everyday with futures





not sure 35k makes one super rich

have at least 35,000 in their trading account

NASD rule 2520 and NYSE Rule 431 require only $25K. An individual firm could require more. Most don't. I know IB's PDT threshhold, for instance, is $25K.

In any case, it's a bit of a moot issue as anyone who wants to avoid the PDT rule can trade day-trade futures on stock indexes without any limit of any kind whatsoever.

Perhaps the reason that one rarely sees any complaints about the PDT rules is that a possible complainant doesn't want to admit that he/she is trading less than $25K. More likely most of them are trading futures.

I'm pretty sure the rule applies to futures too...but I'm open to being corrected.

have at least 35,000 in their trading account

NASD rule 2520 and NYSE Rule 431 require only $25K. An individual firm could require more. Most don't. I know IB's PDT threshhold, for instance, is $25K.

In any case, it's a bit of a moot issue as anyone who wants to avoid the PDT rule can trade day-trade futures on stock indexes without any limit of any kind whatsoever.

Perhaps the reason that one rarely sees any complaints about the PDT rules is that a possible complainant doesn't want to admit that he/she is trading less than $25K. More likely most of them are trading futures.

I'm pretty sure the rule applies to futures too...but I'm open to being corrected.

No, the rule does not apply to futures.

Actually, I find myself in rare agreement with zedor. I don't know what right the government has to make a rule that restricts what someone does in the market. And as he correctly states, someone trading options must definitely have much more than $25K, because the option premium is not included in the $25K calculation.

That said, the rule can be avoided by simply trading futures. And, the futures have a more favorable tax implication as well. And by the way, my personal opinion is that options are a suckers game, especially for a newbe.

And, if you wanted to read some complaints about the day trading rule, I read them for time to time on elitetrader.com. Not as frequently these days since the rule has been in existence for quite a while.

IT

I think you are going to be hard pressed to find any brokerage short of a boiler room that is willing to let you dabble in futures just because you are able to post the initial margin...