Stock Trading Quick Tip: The Pattern Day Trader (PDT) Rule

The Stock Trading Reality Podcast - http://claytrader.com/podcast/ Join My Private Trading Team - http://claytrader.com/innercircle/ Learn to Use Charts - http://claytrader.com/training/ The Pattern Day Trader (PDT) rule is one that is enforced by the government. What are my thoughts on it? How should you trade if this affects you? All that and more in this stock trading quick tip video. ClayTrader.com and its employees are not a Registered Investment Advisor, Broker Dealer or a member of any association for other research providers in any jurisdiction whatsoever and we are not qualified to give financial advice. Investing/trading in securities is highly speculative and carries an extremely high degree of risk.

Comments

1. im confused, so i can only do 3 day trade of the same stocks or trade 3 different stocks? please elaborate it
2. I spent the past month learning about stocks, and slowly building my account to $2,000 so I could get robinhood instant... got instant today, and just learned about PDT as I was day trading. I'm out of trades on day 1 (Friday 3/31/17) When will I have another trade?
3. please clarify for me, so if i buy a stock today and sell it the same day thats already 2 day trades? but what if i buy a trade and hold it overnight? is it 1 day trade? thanks
4. so basically, if i buy stocks but hold overnight (which i know isnt always good), I would sort of escape this pattern rule. Correct? ive also watched your video on the ways to avoid the rule: cash account, etc.
5. Can you be listed as a PTD if you're using a cash account with less than 25k or does this just apply to margin accounts? Im still new to this, so my bad if its a dumb question.
6. Hi Clay thanks for the video it is very helpful! Lets say I do one day trade on Tuesday, One on Wednesday and One on Thursday. Will I get back one day trade on next Tuesday, One on Wednesday and One on Thursday? I know its kind of a dumb question but I just got locked in a trade because I was unaware of this rule.
7. Because of that rule, and not having 30-35k to trade at the moment (Your gonna need at least some cushion to ensure staying above 25k), I just do swing trades with at most 1 day trade during period. That way if I need to get out of a trade the same day, I can. The next day I can close a trade no problem if I need to. What really sucks is how confusing transaction rules are as to whats a day trade. (buy 100/sell 50/sell 50) = 1 DT (Buy 50/Buy50/sell 100) = 2 DT (buy 50/buy50/sell 51) = 2 DT... BTW, for options calls/puts are different trades, so xyz call is different instrument than xyz put, as far as day trades, and each strike of a call or put is also a different instrument.
8. Pattern day trader is a term defined by FINRA to describe a stock market trader who executes 4 (or more) day trades in 5 business days in a margin account,
   provided the number of day trades are more than six percent of the
   customer's total trading activity for that same five-day period.the rule applies to margin accounts, but not to cash accounts.
   The main rule is that in order to engage in pattern day trading you must
   maintain an equity balance of at least $25,000 in a margin account.The required minimum equity must be in the account prior to any daytrading activities. ~Wikipedia
9. Hi Clay, first, thanks 4 all your informative videos, im learning alot from them. I got a question, you said in your video that we can make unlimit vertical options trades with a less than 25000$ cash account , i spoke with my broker (options house) and he said that i can only make 3 every 5 days, could you plz clear out this to me? Thanks in advance.
10. Clay, I like you and think you have great information. But buddy let's get on with the program, we get it, it frustrates you. You told us 5 times, where are we going with this. You have knowledge, teach us.
11. Another question please could you tell me is the 3 trade a week rule is in the UK too or not?
12. How is someone with 25k more sophisticated than the person with 24,999. It's a form of control in my opinion. It keeps the middle class from taking risks. What the government doesn't realize is, risk is greatly diminished as knowledge about a risk is increased.
13. I am glad I am from Canada. We have Quest Trade, and like us all there is always Sure Trader. Your rule sucks.
14. I can't find any law regarding this for the UK. I'm guessing I can trade as much as I want lol.
15. Question, if you did 3 full trades on monday, then you buy some shares before the day is over, then the next day, tuesday, you can sell them correct? And can continue with that pattern of Buying one day, sell the next, until the next monday where you have your 3 day trades available again?
16. If u Don't have margin then u can trade as many times as ur buying power allows u too b4 settled funds r exhausted. Settled funds take 3 days to complete in order to prevent and minimize over trading and emotional indecision from novice and intermediate traders. PDT in reality can b looked at as a defined edge because it will slow u down from blowing out ur account if u lack screen time and a discretionary/systematic approach..
17. what's up clay. quick question plz. By definition pdt rule reads "four or more day trades in any five consecutive business day period; the rule applies to margin accounts, but not to cash accounts." if the pdt rule doesn't apply to cash accounts it is safe to day trade in cash accounts?
18. This law strictly in the USA?
19. does this mean that i can buy today and sell tomorrow?
20. Thanks for clearing that up.