What is the Pattern Day Trade Rule? (PDT) for Stock Traders

What is the Pattern Day Trade Rule? (PDT) for Stock Traders ★ SUMMARY ★ What is the Pattern Day Trade Rule? Pattern Day Trade rule also known as PDT is in place to protect the beginner traders. It is important to know this rule if you have less than $25,000 in your bank account or trading account and you are an active trader. The rule states if you are an active trader, meaning if you make 4 or more trades in a 5 day period, then you will be stuck in your fourth trade place. Therefore you won’t be able to make any more trades until your early trades are cleared. For example, if you made two trades on Monday, one on Tuesday, and one on Wednesday, you won’t be able to make a trade on Thursday; therefore, if the market is crashing, you will be stuck in that place. Posted at: http://tradersfly.com/2014/04/pattern-day-trade-rule-pdt/ ★ SHARE THIS VIDEO ★ https://youtu.be/zuBGWR8y1gQ ★ SUBSCRIBE TO MY YOUTUBE: ★ http://bit.ly/addtradersfly ★ ABOUT TRADERSFLY ★ TradersFly is a place where I enjoy sharing my knowledge and experience about the stock market, trading, and investing. Stock trading can be a brutal industry especially if you are new. Watch my free educational training videos to avoid making large mistakes and to just continue to get better. Stock trading and investing is a long journey - it doesn't happen overnight. If you are interested to share some insight or contribute to the community we'd love to have you subscribe and join us! FREE 15 DAY TRIAL TO THE CRITICAL CHARTS -- http://bit.ly/charts15 GET THE NEWSLETTER -- http://bit.ly/stocknewsletter STOCK TRADING COURSES: -- http://tradersfly.com/courses/ STOCK TRADING BOOKS: -- http://tradersfly.com/books/ WEBSITES: -- http://rise2learn.com -- http://criticalcharts.com -- http://investinghelpdesk.com -- http://tradersfly.com -- http://backstageincome.com -- http://sashaevdakov.com SOCIAL MEDIA: -- http://twitter.com/criticalcharts/ -- http://facebook.com/criticalcharts/ MY YOUTUBE CHANNELS: -- TradersFly: http://bit.ly/tradersfly -- BackstageIncome: http://bit.ly/backstageincome

Comments

1. Correct me if I am wrong, the PDT rule will apply if 4th trade has been make during 5 business day? That make sense?
2. What is a cash account vs a margin account. Also if you have a cash account you can do unlimited day trades in a week right?
3. Does this apply to cash accounts?
4. Sorry for my ignorance but lets say i used up my 4 trades in a week will i have to wait for next week to get the 4 back so i can trade for the next week? Im sorry im very new to trading and this rule seems brutal your advice would mean the world thanks
5. glad I'm Canadian no PDT for me.. Love having no limits
6. How many trades can I hold overnight under the PDT rule?
7. Shouldn't you mention more clearly you are talking about margin accounts, and leveraged products? A normal cash account and conventional stock trading surely don't have these rules? If i trade normal stocks, there is the risk that I lose money, but i will always have a positive balance.
8. If I purchase 3 or 4 stocks and sell them all the following day is that violating the PDT Rule?
   
   Thanks in advanced
9. i guess ill be stuck with only 4 trades per week. But i think two brokages will be fine.
10. ah.. this is for non-margin accounts only.
11. Just saw this video, starting @ :58, that is not 100% accurate. You and your broker CAN exit your position, you will however get caught in the PDT rule. You can ALWAYS exit risk, but you will have to weigh the choice of portfolio protection or PDT coding. Also DAY trades are an OPEN/CLOSE or CLOSING OPEN(short sell)/BUYING CLOSE(cover) in the same day. Not open on day 1, and liquidate on several days after that. Also margin requirements don't change based on the coding, they are position specific as well as firm specific (house maintenance).
12. can i trade with unsettled funds as much as i want on a margin account ?
    for example can i buy 100 shares of zzz and sell them on the same day and repeat that for 3 or 4 times ?
    would that be ok if im on a margin account not a cash one???
13. Margin account only, correct? So if I'm not using any leverage or if what I have is a cash account, I can trade as many as I want?
14. Sasha does this rule apply to every one or how does it really because this pattern rule has confuse me I've been really studying about stocks and i came across this and it has just confuse me plz can you explain in full detail thanks
15. This is certainly a rule created to squeeze the "little" guys. I'm trading profitably with under $25k and have found myself stuck between a rock and a hard place when wanting to set stops and possibly exit a trade quickly. Certainly appreciate the clarification.
16. I can't agree with you at 1:23. You give an example of entering a position of 100 shares, then you sell 20 on Tuesday, 20 on Wednesday and another 20 on Thursday. How can these consider to be the day trading as they are not executed buy-and-sell in the same day? Unless you are buying it on Tuesday, but it only accounted once.
17. thanks, you're the best teacher, I've been learning from you for almost a year
18. if I use $25,000 in one day, do I have to wait 3 days for the money to settle to use it again?
    does t+3 apply to accounts over $25k
19. Does IB have PDT since it's an offshore brokerage?
20. how does suretrade allow multiple transactions for accounts under 25k? is it because they are bahama based?