Why The Pattern Day Trader Rule Proves The SEC Rivals Osama Bin Laden In Terrorism

Yup I said it. While making a nice quick 5+% American profit, or $350ish, in an hour on my LGDI trade a few weeks ago, my blood boiled over due to the missed opportunities caused by the SEC’s pattern day trading rule. And while I’ve attacked it in the past, there was no formal summary post that explained all my key points. Considering how many stocks are in play today and the fact that I am forced to ignore 99% of them, it’s time I unleash this fury.

The formal definition of this inane rule is HERE, and once you read it, you’ll begin to understand why I call it the Reign Of Terror Rule. In fact, I’ve got an entire category devoted to it as I’ve documented each and every time it’s interfered with my trading since I began TIM in November 2007.

Basically, if your trading account is below $25,000—as are the accounts of so many poor people out there—you can only day trade (meaning in and out the same day) 4 times per week. If you trade more than that, you get flagged as a pattern day trader and your account gets restricted because you’re considered evil, as most day traders are believed to be. (Yes sometimes you can trade a few more times than that—since its all rather gray area and the brokerage firms themselves despise this rule—but my point is there should be no limits whatsoever!)

Even though I’ve still got over $500,000 in liquid cash to trade with, I went back to my $12,415 roots specifically to draw attention to this injustice because most people, including industry big wigs, don’t even know about it. After all, the last time I had this little money, it hadn’t been instituted and I’m forever thankful since trading freedom allowed me to get rich.

Now, in my quest to repeat my feat of turning thousands into millions, I’m only up 50% in 7 months, thanks in large part to the obstacles created by this rule, whereas if I wasn’t chained down, it’d be more like 100-200% maybe even 300%. No joke—click that category above and see what kind of crap with which I’ve had to deal.

I know from countless blog post comments and emails from you guys—even you non-trading addicts out there—that it’s absolute hell for you too. So, in the comments section of this post, please write about any and all experiences with this rule in order for the freedom-hating SEC can better understand the problem. Sad to say, but I think the only way to get the attention of these terrorists—and that’s what they are, using this rule to attack wannabe day traders everywhere because they disapprove of our values— is if the comments section of this post surpasses the 9/11 body count, which was 2,974. But since this is about one of our great nation’s most important ideals—freedom—it’s imperative that we succeed and show these terrorists what we’re really made of!

Please be honest—thanks to all the easy money that causes us to act like immature pricks (see EliteTrader.com and my inappropriate terrorist comments (although this is what it’s gonna take to get people’s attention….sadly)), we day traders already have a bad enough reputation.

Here, I’ll start—See some examples of what I’m talking about HERE, HERE, HERE, HERE and HERE and that’s all just in the last few weeks! Feel free to refer to problem # in your comments if you have similar experiences/thoughts:

Problem #1: Like limiting a painter to a certain number of brushstrokes

Day trading is all about trial and error—it’s best to test out the waters with small positions, scaling in and out depending on the price action. When I’m limited to one position per day—at most—I’m forced to be perfect in my timing, which not only is incredibly difficult, if not impossible, but because I’m trading smallcaps and microcaps, this rule has made this game more dangerous than it has to be. Like painting, trading is an art—can you imagine a rule where an artist was limited to 1 brushstroke/day? The painting not only would take forever but it would suck! This is wrong. I am most profitable when I can scale in and out easily, cut my losses quickly and re-enter when the price action is more to my liking.

Problem #2: Hurts Profit Potential

Since microcaps and smallcaps are somewhat illiquid, worthy trading opportunities come about only so often and when they do, they usually come in bunches. Thanks to this injustice, I often find myself unable to trade all the worthy opportunities out there, hurting my profit potential.

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Problem #3: It’s Gosh Darn Un-American!

Uhhh, isn’t this a free country? Shouldn’t we be able to get rich in the stock market? I got rich by trading thousands upon thousands of stocks and I made plenty of mistakes because thanks to any other ridiculous SEC regulations, there was no way for me to ever find/have a mentor. Now that I am that mentor that soooo many people need—teaching PennyStocking to anyone interested—the SEC has this rule that basically says the way I got rich in 4 years—playing the allegedly most random /dangerous stocks in the world and without using leverage—is too dangerous?!?!? Oh no you didn’t! My strategies are still gonna make people rich—quicker than most—but thanks to these SEC Bin-Laden-like-freedom-hating bastards, it’s just gonna take people with under $25,000 a little longer.

Problem #4: Hurts Short Sellers Who Add Market Liquidity

That’s right I said it, short sellers are good for markets—despite all the crap we take, we bring reason and liquidity into one sided markets, especially those that are filled with hype and manipulation like the penny stock market!

Problem #5: Punishes the wrong people

I understand this rule is supposed to protect those who can’t afford to lose much money and since they have little $, they are assumed to be unsophisticated traders/investors (who besides crazy TIM doesn’t use all their $ just to prove a point like this?!?!), but this rule is only applicable to those of us who trade securities—by and large who don’t even use leverage—while allowing traders in infinitely more dangerous niches total freedom. Those are the guys about which Osama Bin SEC should worry—their trading has proven capable of bringing down legendary institutions HERE and HERE and economic collapse!

So,go on and leave short or long comments, but comment often—in the words of William Wallace, I say to you “Aye, fight the SEC and your future in the financial industry may die. Run, and it’ll live… at least a while. And dying in your firms, many years from now, would you be willin’ to trade ALL the days, from this day to that, for one chance, just one chance, to come back here and tell Osama Bin SEC that they may regulate our industry, but they’ll never regulate… OUR FREEDOM!

Posted in Analogies, Basics, Criminals, Pattern Day Trader Rule, Rants

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  • cacaosteve

    Actually, you can only day trade 3 times. 4 times and you are flagged according to what I have read.

    “A pattern day trader is defined in Exchange Rule 431 (Margin Requirement) as any customer who executes 4 or more round-trip day trades within any 5 successive business days”
    http://en.wikipedia.org/wiki/Pattern_day_trader

  • cacaosteve

    Actually, you can only day trade 3 times. 4 times and you are flagged according to what I have read.

    “A pattern day trader is defined in Exchange Rule 431 (Margin Requirement) as any customer who executes 4 or more round-trip day trades within any 5 successive business days”
    http://en.wikipedia.org/wiki/Pattern_day_trader

  • novalis78

    so…ROYL below 9, what’s your target?

  • novalis78

    so…ROYL below 9, what’s your target?

  • Evan

    FOF YEAH!

  • Evan

    FOF YEAH!

  • Keith

    It should close the gap @ 8.40

  • Keith

    It should close the gap @ 8.40

  • YngvaiMalmsteve

    Yeah, the daytrader rule is exactly what lead me to one of my biggest trading losses ever…JRJC. It was a trade I shouldn’t have got into in the first place, but what made it worse was the fact I couldn’t get out quickly without violating the rule.

    Good trading means taking losses quickly, and this rule completely prevents that

  • YngvaiMalmsteve

    Yeah, the daytrader rule is exactly what lead me to one of my biggest trading losses ever…JRJC. It was a trade I shouldn’t have got into in the first place, but what made it worse was the fact I couldn’t get out quickly without violating the rule.

    Good trading means taking losses quickly, and this rule completely prevents that

  • codyhof

    I started trading with real money a week ago and am already being limited by this rule…

  • codyhof

    I started trading with real money a week ago and am already being limited by this rule…

  • Keith

    Couldnt get any royl shares with scottrade

  • Keith

    Couldnt get any royl shares with scottrade

  • Ryan

    Level II shows someone is waiting to buy 12000 shares of NTI at $10. Does that mean this person knows NTI is falling back to $10 or what?

  • Ryan

    Level II shows someone is waiting to buy 12000 shares of NTI at $10. Does that mean this person knows NTI is falling back to $10 or what?

  • Keith

    Squeeze on GRO

  • Keith

    Squeeze on GRO

  • Davey

    Yes the potential profits lost hurts, but it is the real losses that hurt even more. When you are limited with trades you end up holding these POS longer than you would if you could get back in. We get squeezed because we think we won’t get a chance to get back in and before you know it you’ve got one big loss instead of just cutting losses quickly and looking for a new entry.

  • Davey

    Yes the potential profits lost hurts, but it is the real losses that hurt even more. When you are limited with trades you end up holding these POS longer than you would if you could get back in. We get squeezed because we think we won’t get a chance to get back in and before you know it you’ve got one big loss instead of just cutting losses quickly and looking for a new entry.

  • lmsmith

    This rule really does hinder my ability to make so much more money that I KNOW I can make- I always have to choose between 3 stocks- and sometimes the one I pick is not the favorable one that tanks or rise that fastest, among the 3

  • lmsmith

    This rule really does hinder my ability to make so much more money that I KNOW I can make- I always have to choose between 3 stocks- and sometimes the one I pick is not the favorable one that tanks or rise that fastest, among the 3

  • http://www.myspace.com/thetraknologist traknologist

    Keith you have to open an account with thinkorswim.com and use tim as your reference.

  • http://www.myspace.com/thetraknologist traknologist

    Keith you have to open an account with thinkorswim.com and use tim as your reference.

  • Keith

    Long GRO @ 6.75

  • Keith

    Long GRO @ 6.75

  • Evan

    I’ve been watching the Level II on NTI all day- nowhere near the type of manipulation as other stocks ‘in-play’ can sometimes show, but I’ve definitely seen the ASK (or buy) side giving up on fills and lowering the price. As to your big order at $10, that could be real or fake- no way to know until we get closer and see if it disappears, shrinks, or breaks into pieces. One thing’s for sure- Market makers had fun on the low volume pop above 15 this morning (these low floaters can be crazy).

    Tim good post! I’m over the 25k problems at this point, but have definitely been there and know how bad it sucks!

  • Evan

    I’ve been watching the Level II on NTI all day- nowhere near the type of manipulation as other stocks ‘in-play’ can sometimes show, but I’ve definitely seen the ASK (or buy) side giving up on fills and lowering the price. As to your big order at $10, that could be real or fake- no way to know until we get closer and see if it disappears, shrinks, or breaks into pieces. One thing’s for sure- Market makers had fun on the low volume pop above 15 this morning (these low floaters can be crazy).

    Tim good post! I’m over the 25k problems at this point, but have definitely been there and know how bad it sucks!

  • James

    I’m a newbie trader from the UK, and currently I’m having to decide whether I should trade in the US or UK markets. This rule alone, however, looks like a great reason to stay in the UK.

    It makes me wonder if the SEC is likely to have discouraged many more non-US traders like myself in the past, losing out on hot money flows (when we buy shares) and additions to market liquidity (when I short-sell shares)… If thousands of other foreign investors decide not to operate in US markets for the same reason, I wonder how great an affect this will have had/is having on the US economy?

  • James

    I’m a newbie trader from the UK, and currently I’m having to decide whether I should trade in the US or UK markets. This rule alone, however, looks like a great reason to stay in the UK.

    It makes me wonder if the SEC is likely to have discouraged many more non-US traders like myself in the past, losing out on hot money flows (when we buy shares) and additions to market liquidity (when I short-sell shares)… If thousands of other foreign investors decide not to operate in US markets for the same reason, I wonder how great an affect this will have had/is having on the US economy?

  • cacaosteve

    guess my comment didn’t make it through at first… You can do 3 daytrades and on the 4th you are a pattern daytrader. “A pattern day trader is defined in Exchange Rule 431 (Margin Requirement) as any customer who executes 4 or more round-trip day trades within any 5 successive business days”
    http://en.wikipedia.org/wiki/Pattern_day_trader

  • cacaosteve

    guess my comment didn’t make it through at first… You can do 3 daytrades and on the 4th you are a pattern daytrader. “A pattern day trader is defined in Exchange Rule 431 (Margin Requirement) as any customer who executes 4 or more round-trip day trades within any 5 successive business days”
    http://en.wikipedia.org/wiki/Pattern_day_trader

  • cacaosteve

    guess my comment didn’t make it through at first… You can do 3 daytrades and on the 4th you are a pattern daytrader. “A pattern day trader is defined in Exchange Rule 431 (Margin Requirement) as any customer who executes 4 or more round-trip day trades within any 5 successive business days” according to wikipedia.

  • cacaosteve

    guess my comment didn’t make it through at first… You can do 3 daytrades and on the 4th you are a pattern daytrader. “A pattern day trader is defined in Exchange Rule 431 (Margin Requirement) as any customer who executes 4 or more round-trip day trades within any 5 successive business days” according to wikipedia.

  • cacaosteve

    One of the obviously bad parts of the rule is that you might not want to get out of a position because you will violate the rule. That is ridiculous! You CAN get out but if it is your 4th daytrade you might get flagged.

  • cacaosteve

    One of the obviously bad parts of the rule is that you might not want to get out of a position because you will violate the rule. That is ridiculous! You CAN get out but if it is your 4th daytrade you might get flagged.

  • getshorty

    COnsidering re-shorting gro and hold overnight.

    Will wait for possible squeeze.

    Any thoughts?

  • getshorty

    COnsidering re-shorting gro and hold overnight.

    Will wait for possible squeeze.

    Any thoughts?

  • cacaosteve

    You could divide your capital between 2 or more accounts. Since you are not using all capital on one trade it should not be a problem. Then when you are up to 25k just combine to make it easier.

  • cacaosteve

    You could divide your capital between 2 or more accounts. Since you are not using all capital on one trade it should not be a problem. Then when you are up to 25k just combine to make it easier.

  • S Adams

    With the market as volatile as it is people who can’t daytrade are at a huge disadvantage. I’m a little surprised there is no class action lawsuit yet.

  • S Adams

    With the market as volatile as it is people who can’t daytrade are at a huge disadvantage. I’m a little surprised there is no class action lawsuit yet.

  • Adam

    i got squeezed on grow, short 6.47 out 6.67. saw it break 6.50 a few tmes and jumped in

  • Adam

    i got squeezed on grow, short 6.47 out 6.67. saw it break 6.50 a few tmes and jumped in

  • getshorty

    Do what cacao says, I do that, right now over pdt on Ibrokers (tomorrow will be free) and have all trades left on TOS, and have taken the opposite side of the trade in the other broker to get net 0 position. closed both next day to avoid day trade.

    I think in order to make a strong case we should need some statistics on how many people has loose their shirt because overtraiding and before the PDT rule and compare to how many people has lost their shirts after the pdt rule. we’ll need that hard evidence to get the case going. Other way it will just look like greedy day traders against poor grandma.

  • getshorty

    Do what cacao says, I do that, right now over pdt on Ibrokers (tomorrow will be free) and have all trades left on TOS, and have taken the opposite side of the trade in the other broker to get net 0 position. closed both next day to avoid day trade.

    I think in order to make a strong case we should need some statistics on how many people has loose their shirt because overtraiding and before the PDT rule and compare to how many people has lost their shirts after the pdt rule. we’ll need that hard evidence to get the case going. Other way it will just look like greedy day traders against poor grandma.

  • http://www.timothysykes.com Timothy Sykes

    u shouldnt have to split your account into 2 and pay double commissions, u shouldnt even have to have to be considering work arounds…this is a like u being in a wheelchair and living in a house with no ramps, only stairs! (well u dont have to go upstairs….)

  • http://www.timothysykes.com Timothy Sykes

    u shouldnt have to split your account into 2 and pay double commissions, u shouldnt even have to have to be considering work arounds…this is a like u being in a wheelchair and living in a house with no ramps, only stairs! (well u dont have to go upstairs….)

  • Jeff

    It should not be the responsibility of the SEC to help stop people from losing their own money. It’s the responsibility of the people doing the trading and no one elses…

  • Jeff

    It should not be the responsibility of the SEC to help stop people from losing their own money. It’s the responsibility of the people doing the trading and no one elses…

  • getshorty

    THoughts on re-shorting gro?

    A am i becoming a pig?… oink oink?

  • getshorty

    THoughts on re-shorting gro?

    A am i becoming a pig?… oink oink?

  • Alex

    Well there is some logic behind it. And I don’t think it’s just because the SEC thinks they can’t afford to lose it (there’s no law preventing the same person from gambling all that money away in Vegas). 90% of traders lose money, and probably most of them are inexperienced traders – who probably have small accounts. So I think the SEC is protecting them from the predators out there – the brokerages who encourage active trading through their marketing and the experienced professionals with lots of experience and sophisticated trading systems. Without the rule, an inexperienced trader’s $20,000 account could end up in the account of an experienced professional in a short matter of time. Sure, it sucks for people like Tim Sykes who have gone from $10,000 to $1M, and then decide to start trading with $10,000 again. But the majority of people with $10,000 accounts are probably inexperienced and probably don’t know where they can get an edge in the market.

  • Alex

    Well there is some logic behind it. And I don’t think it’s just because the SEC thinks they can’t afford to lose it (there’s no law preventing the same person from gambling all that money away in Vegas). 90% of traders lose money, and probably most of them are inexperienced traders – who probably have small accounts. So I think the SEC is protecting them from the predators out there – the brokerages who encourage active trading through their marketing and the experienced professionals with lots of experience and sophisticated trading systems. Without the rule, an inexperienced trader’s $20,000 account could end up in the account of an experienced professional in a short matter of time. Sure, it sucks for people like Tim Sykes who have gone from $10,000 to $1M, and then decide to start trading with $10,000 again. But the majority of people with $10,000 accounts are probably inexperienced and probably don’t know where they can get an edge in the market.

  • novalis78

    ROYL gap down tomorrow?

  • novalis78

    ROYL gap down tomorrow?

  • TomT

    level II in TOS??? it doesn’t show much.. i’m I missing something

  • TomT

    level II in TOS??? it doesn’t show much.. i’m I missing something

  • http://www.timothysykes.com Timothy Sykes

    short 500 PTEK at 5.15, will add if it spikes tomorrow, but this could just fall apart here

  • http://www.timothysykes.com Timothy Sykes

    short 500 PTEK at 5.15, will add if it spikes tomorrow, but this could just fall apart here

  • getshorty

    cred breaking down…

    Bye bye baby..

  • getshorty

    cred breaking down…

    Bye bye baby..

  • Keith

    PTEK should move to 4.70 quickly Iam in short from 5.48 this norning

  • Keith

    PTEK should move to 4.70 quickly Iam in short from 5.48 this norning

  • GT4NE1

    TomT,

    This forum post might help. Looks like more detailed Level II stuff is in the works at TOS.

    http://timothysykes.com/forum/viewtopic.php?id=480

  • GT4NE1

    TomT,

    This forum post might help. Looks like more detailed Level II stuff is in the works at TOS.

    http://timothysykes.com/forum/viewtopic.php?id=480

  • Adam

    nice fade on GRO too bad i blew all my shares of it and took a loss

  • Adam

    nice fade on GRO too bad i blew all my shares of it and took a loss

  • http://www.timothysykes.com Timothy Sykes

    out at 4.90, not ideal, meeting, be back in an hour cya guys, good solid trading day!

  • http://www.timothysykes.com Timothy Sykes

    out at 4.90, not ideal, meeting, be back in an hour cya guys, good solid trading day!

  • TomT

    Thx alot GT4NE1

  • TomT

    Thx alot GT4NE1

  • getshorty

    Shorted ptek at 4.78 feeling a little squeezee, holding overnight.

  • getshorty

    Shorted ptek at 4.78 feeling a little squeezee, holding overnight.

  • Al

    GGC shorted @ 4.81 FYI only trade at own risk

  • Al

    GGC shorted @ 4.81 FYI only trade at own risk

  • Bill

    I live in Canada and my online brokerage does not enforce the pattern day trading rules, bless their hearts……..

  • Bill

    I live in Canada and my online brokerage does not enforce the pattern day trading rules, bless their hearts……..

  • http://www.within49miles.com Anthony Brown

    What’s with these NTI trades? A couple hundred shares go for ~14.10, followed very quickly by a couple hundred shares at 14.3499. It’s happened about 4 times now.

  • http://www.within49miles.com Anthony Brown

    What’s with these NTI trades? A couple hundred shares go for ~14.10, followed very quickly by a couple hundred shares at 14.3499. It’s happened about 4 times now.

  • TimSucks

    Occupation is Terror

  • TimSucks

    Occupation is Terror

  • codyhof

    There goes PTEK

  • codyhof

    There goes PTEK

  • Terri

    Cool site! I am watching and learning. Lots of good trades today..congrats!

  • Terri

    Cool site! I am watching and learning. Lots of good trades today..congrats!

  • Keith

    Hey al I am not a good trader but your short in GGC wasnt a great setup. There is too much support just below your entry around 4.75 and then more @ 4.60 which limits your downside potential.GL though

  • Keith

    Hey al I am not a good trader but your short in GGC wasnt a great setup. There is too much support just below your entry around 4.75 and then more @ 4.60 which limits your downside potential.GL though

  • Alex

    Is HEV being pumped by paid mailers or a newsletter? Or is it just going up because it’s a Li-Ion battery company?

  • Alex

    Is HEV being pumped by paid mailers or a newsletter? Or is it just going up because it’s a Li-Ion battery company?

  • Keith

    Are we going to see GRO get to unchanged on the day for a Spinner top?

  • Keith

    Are we going to see GRO get to unchanged on the day for a Spinner top?

  • Evan

    I know off topic- but who is the girl in the background on CNBC- gotta get to Harvard!!!

  • Evan

    I know off topic- but who is the girl in the background on CNBC- gotta get to Harvard!!!

  • JeffMoates

    Hey everybody, I’m back! What’s happened?

    Al, duh, we always trade at our own risk. Thanks for the warning though.

    Who’s shorting GRO overnight? Anyone? Ymaighlejihdf? (I’m too lazy to scroll up and look at how to properly spell your name)

  • JeffMoates

    Hey everybody, I’m back! What’s happened?

    Al, duh, we always trade at our own risk. Thanks for the warning though.

    Who’s shorting GRO overnight? Anyone? Ymaighlejihdf? (I’m too lazy to scroll up and look at how to properly spell your name)

  • Al

    Thanks Keith

  • Al

    Thanks Keith

  • balls…or just plain nuts…

    PDT rule burned me twice on my zecco account. The first time, I played dumb, and got my privileges back. The second time, I shorted a stock, then added more shares to my short position, finally covering all at once. This was counted as two day trades, putting me over the limit, again restricting my account. I’ve switched to TOS, so I won’t have to wait 90 days to daytrade again. I’ll have to use Zecco for holds only.

  • balls…or just plain nuts…

    PDT rule burned me twice on my zecco account. The first time, I played dumb, and got my privileges back. The second time, I shorted a stock, then added more shares to my short position, finally covering all at once. This was counted as two day trades, putting me over the limit, again restricting my account. I’ve switched to TOS, so I won’t have to wait 90 days to daytrade again. I’ll have to use Zecco for holds only.

  • codyhof

    Im considering jumping back into GRO at 7.00 Jeff, depending on what it does into the close. A bit scared of holding overnight but it may pay off.

  • codyhof

    Im considering jumping back into GRO at 7.00 Jeff, depending on what it does into the close. A bit scared of holding overnight but it may pay off.

  • TommyTim

    SQNM is a great short at 9.51. The news is good but not that good. Historically biotechs with this type of news get sold off the next day.

  • TommyTim

    SQNM is a great short at 9.51. The news is good but not that good. Historically biotechs with this type of news get sold off the next day.

  • Al

    Jeffery Moates that is why your a lemming your LAZY.

    enjoy

  • Al

    Jeffery Moates that is why your a lemming your LAZY.

    enjoy

  • Young Gunz

    I think the rule is ridiculous. Like many have said before, there is no restrictions on gambling. Limiting day traders because they think its bad for the traders and the market is humorous considering whats happened to the economy in the last year. Huge big name cooperations are loosing their shirts. If day trading was such an addictive gambling epidemic there’s be more stories of people leveraging debt to get above the $25k limit. People aren’t doing that the limit isn’t doing anything but slowing down people that want to learn to trade stocks and turning away those that don’t think it is worth it unless they have a lot of money.

    I would be a little more OK with the rule if it was limited to a certain trial period when starting a new account at a broker. That way someone thats had 6 months to a year with a broker is more likely to have done their homework then someone fool heartedly jumping in. At least I think it is more likely that the SEC would compromise with a time limit more then completely dropping the rule all together. It may be easier to bend them then break them.

  • Young Gunz

    I think the rule is ridiculous. Like many have said before, there is no restrictions on gambling. Limiting day traders because they think its bad for the traders and the market is humorous considering whats happened to the economy in the last year. Huge big name cooperations are loosing their shirts. If day trading was such an addictive gambling epidemic there’s be more stories of people leveraging debt to get above the $25k limit. People aren’t doing that the limit isn’t doing anything but slowing down people that want to learn to trade stocks and turning away those that don’t think it is worth it unless they have a lot of money.

    I would be a little more OK with the rule if it was limited to a certain trial period when starting a new account at a broker. That way someone thats had 6 months to a year with a broker is more likely to have done their homework then someone fool heartedly jumping in. At least I think it is more likely that the SEC would compromise with a time limit more then completely dropping the rule all together. It may be easier to bend them then break them.

  • Evan

    Young Gunz- great post! Tim- I’d give him $5 of my TimBucks for that one since I’ve posted at least 5 off-topic comments in the past few days.

    ps. NTI- you’re cleared to tank now- thanks!

  • Evan

    Young Gunz- great post! Tim- I’d give him $5 of my TimBucks for that one since I’ve posted at least 5 off-topic comments in the past few days.

    ps. NTI- you’re cleared to tank now- thanks!

  • YngvaiMalmsteve

    No, I’m not shorting GRO. I did re-enter my ROYL short position when the 60 min sma crossed the 10 min sma. But that was still a poorly timed entry because it was right at support at $9. Luckily it’s still close to $9. I’ll probably add a bit to my position into the close and look for it to fill the gap tomorrow.

    Yeah, it’s a commodities play and not an ideal setup but I would say the odds are still in my favor for a further decrease.

  • YngvaiMalmsteve

    No, I’m not shorting GRO. I did re-enter my ROYL short position when the 60 min sma crossed the 10 min sma. But that was still a poorly timed entry because it was right at support at $9. Luckily it’s still close to $9. I’ll probably add a bit to my position into the close and look for it to fill the gap tomorrow.

    Yeah, it’s a commodities play and not an ideal setup but I would say the odds are still in my favor for a further decrease.

  • YngvaiMalmsteve

    NTI…probably a 50/50 chance now of it going either way…just like playing roulette

  • YngvaiMalmsteve

    NTI…probably a 50/50 chance now of it going either way…just like playing roulette

  • TomT

    Ok.. overnighter.. ring in..

  • TomT

    Ok.. overnighter.. ring in..

  • YngvaiMalmsteve

    Added a bit more to my ROYL position. My average entry price is now $9.04.

  • YngvaiMalmsteve

    Added a bit more to my ROYL position. My average entry price is now $9.04.

  • eb

    YngvaiMalmsteve…im also short ROYL. yes…under $9 now.

  • eb

    YngvaiMalmsteve…im also short ROYL. yes…under $9 now.

  • novalis78

    ROYL, nice fall towards the close. Yngvai, are you still on board?

  • novalis78

    ROYL, nice fall towards the close. Yngvai, are you still on board?

  • YngvaiMalmsteve

    ROYL closing right at $9

  • YngvaiMalmsteve

    ROYL closing right at $9

  • http://www.timothysykes.com timothysykes

    new post:

    http://www.timothysykes.com/2008/06/04/why-geek-commentary-should-never-be-featured-on-any-finance-website/

    i hope u ROYL shorts get squeezed royally, tomorrow’s a new days, i’m waiting for it to crack support at $8.80 first

  • http://www.timothysykes.com timothysykes

    new post:

    http://www.timothysykes.com/2008/06/04/why-geek-commentary-should-never-be-featured-on-any-finance-website/

    i hope u ROYL shorts get squeezed royally, tomorrow’s a new days, i’m waiting for it to crack support at $8.80 first

  • JeffMoates

    TommyTim, pretty decent pick with SQNM, although I bet it would be a 3-4 day short to get any decent gains.

  • JeffMoates

    TommyTim, pretty decent pick with SQNM, although I bet it would be a 3-4 day short to get any decent gains.

  • eb

    novalis…you in ROYL also? Nice close.

  • eb

    novalis…you in ROYL also? Nice close.

  • YngvaiMalmsteve

    Yep, novalis, that was a nice fall into the close and I’m still on board. 200 shares at $9 and another 35 shares at $9.29 for an average of $9.04.

    If I had been smart I would’ve never entered earlier in the day, and just waited for the close in the first place. Would’ve saved myself that $100 loss.

  • YngvaiMalmsteve

    Yep, novalis, that was a nice fall into the close and I’m still on board. 200 shares at $9 and another 35 shares at $9.29 for an average of $9.04.

    If I had been smart I would’ve never entered earlier in the day, and just waited for the close in the first place. Would’ve saved myself that $100 loss.

  • Reflexivity44

    balls…or just plain nuts…

    You were able to short these stocks on zecco? My list does not have most of them.

  • Reflexivity44

    balls…or just plain nuts…

    You were able to short these stocks on zecco? My list does not have most of them.

  • novalis78

    yes, the same for me…was way too late. did struggle with ENT today, was looking at a nice $.40 gain, but my limit was off one penny, did not get filled, and had to get out of my position with a loss instead :-(

    Still, ROYL looks into the abyss, we will see tomorrow. GL to you and eb!

  • novalis78

    yes, the same for me…was way too late. did struggle with ENT today, was looking at a nice $.40 gain, but my limit was off one penny, did not get filled, and had to get out of my position with a loss instead :-(

    Still, ROYL looks into the abyss, we will see tomorrow. GL to you and eb!

  • eb

    novalis…thanks. gl to you also.

  • eb

    novalis…thanks. gl to you also.

  • YngvaiMalmsteve

    Tim, I’m a bit confused. You always talk about shorting into the close on the 1st down day of a big run-up. You yourself did that with PDO on its 1st red day, shorting around $20. Yeah, you got bounced out, but I remember you saying it was still a good trade due to the odds. So am I missing something here?

  • YngvaiMalmsteve

    Tim, I’m a bit confused. You always talk about shorting into the close on the 1st down day of a big run-up. You yourself did that with PDO on its 1st red day, shorting around $20. Yeah, you got bounced out, but I remember you saying it was still a good trade due to the odds. So am I missing something here?

  • http://www.timothysykes.com timothysykes

    if u guys could, please post your daily dollar gain/trades in the comments section of this post:

    http://www.timothysykes.com/2008/06/04/why-geek-commentary-should-never-be-featured-on-any-finance-website/

    so i can feature u!

  • http://www.timothysykes.com timothysykes

    if u guys could, please post your daily dollar gain/trades in the comments section of this post:

    http://www.timothysykes.com/2008/06/04/why-geek-commentary-should-never-be-featured-on-any-finance-website/

    so i can feature u!

  • J Monie

    Tim – If oil continues to go down and dollar up, how will your holdings in PRPFX do

  • J Monie

    Tim – If oil continues to go down and dollar up, how will your holdings in PRPFX do

  • http://www.timothysykes.com Timothy Sykes

    na PRPFX is diversified and conservative, expect to have $ in it for many years, if not decades

  • http://www.timothysykes.com Timothy Sykes

    na PRPFX is diversified and conservative, expect to have $ in it for many years, if not decades

  • http://www.getflashmedia.com ivegotstylekid

    just got out of my 90 day restriction from the last day of febuary, sucked really really bad holding out. I’m on disc 3 of the dvd set and will be joining you in pennystocking really soon.

  • http://www.getflashmedia.com ivegotstylekid

    just got out of my 90 day restriction from the last day of febuary, sucked really really bad holding out. I’m on disc 3 of the dvd set and will be joining you in pennystocking really soon.

  • Bob (VC)

    It’s interesting that the lack of regulation in gambling has come up when talking about the SEC PDT rule. There is a simple reason that there are no “small account” type regulations in gambing- the big money casino owners can afford to pay their lobbiests to stop any type of regulation that might hurt them, whereas no one gives a damn about speaking out for us “poor” (and as far as Wall Street is concerned, we are poor) people.

    If this hurt the brokerages a bit more, we might get some backing from them, but we’re small fish even to them..

  • Bob (VC)

    It’s interesting that the lack of regulation in gambling has come up when talking about the SEC PDT rule. There is a simple reason that there are no “small account” type regulations in gambing- the big money casino owners can afford to pay their lobbiests to stop any type of regulation that might hurt them, whereas no one gives a damn about speaking out for us “poor” (and as far as Wall Street is concerned, we are poor) people.

    If this hurt the brokerages a bit more, we might get some backing from them, but we’re small fish even to them..

  • J Monie

    Thank you Tim :)

  • J Monie

    Thank you Tim :)

  • J Monie

    Start up a petition w/ solid evidence and I have no doubt in my mind you could get hundreds of thousands of signatures.. Present it to SEC with your argument and maybe if your lucky they wont throw it away right in front of your face, but after they smile, shake your hand and you walk away ;)

  • J Monie

    Start up a petition w/ solid evidence and I have no doubt in my mind you could get hundreds of thousands of signatures.. Present it to SEC with your argument and maybe if your lucky they wont throw it away right in front of your face, but after they smile, shake your hand and you walk away ;)

  • DaBear

    I have sufferd all of these problems 1 – 5. This rule is just another way to keep the poor poor.

  • DaBear

    I have sufferd all of these problems 1 – 5. This rule is just another way to keep the poor poor.

  • DaBear

    I have suffered all of these problems just another way to keep the poor poor

  • DaBear

    I have suffered all of these problems just another way to keep the poor poor

  • farsighted

    I wish they would raise the number of trades to 10; I think it’s absurd for 3 trades a week.

    when they implemented this rule things were different.

  • farsighted

    I wish they would raise the number of trades to 10; I think it’s absurd for 3 trades a week.

    when they implemented this rule things were different.

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  • mattyfattie

    DAMN THE SEC- WHAT A BUNCH OF NAZI’S! THERE JUST FUCKIN WITH U TIMMY BECAUSE UR JEWISH!!!! SUE THEM FOR DISCRIMINATION!!!! shalom shalom.

  • mattyfattie

    DAMN THE SEC- WHAT A BUNCH OF NAZI’S! THERE JUST FUCKIN WITH U TIMMY BECAUSE UR JEWISH!!!! SUE THEM FOR DISCRIMINATION!!!! shalom shalom.

  • bigkinder

    Max’s Investment World Stock Market Challenge. is it woth my time???????

  • bigkinder

    Max’s Investment World Stock Market Challenge. is it woth my time???????

  • DaBear

    Happy to break even today:)
    Should have taken profits faster, theres no reason to get gready you can always place another trade and lock in profits, other then of course for the Ben Laden communist basterds the fucking SEC! But I should have know better I was temperarly on the wrong side of the trade.

  • DaBear

    Happy to break even today:)
    Should have taken profits faster, theres no reason to get gready you can always place another trade and lock in profits, other then of course for the Ben Laden communist basterds the fucking SEC! But I should have know better I was temperarly on the wrong side of the trade.

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  • Jose

    I FUCKING HATE THIS RULE!!!!!!!!!!!!!!!!!

  • Jose

    I FUCKING HATE THIS RULE!!!!!!!!!!!!!!!!!

  • YngvaiMalmsteve

    You guys should all be writing letters to the SEC. They have a section on their site where you can file complaints. Not that letters will do any good, but it’s better than bitching about the rule amongst ourselves. If you can get enough people giving them *logical* reasons as to why the rule should change (i.e., it penalizes traders for exiting trades quickly when they should, and the rule increases their risk), who knows…maybe somebody will listen….or maybe not. But it’s always worth getting your voice out there.

    I’ve written two letters already.

  • YngvaiMalmsteve

    You guys should all be writing letters to the SEC. They have a section on their site where you can file complaints. Not that letters will do any good, but it’s better than bitching about the rule amongst ourselves. If you can get enough people giving them *logical* reasons as to why the rule should change (i.e., it penalizes traders for exiting trades quickly when they should, and the rule increases their risk), who knows…maybe somebody will listen….or maybe not. But it’s always worth getting your voice out there.

    I’ve written two letters already.

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  • Henry Lee

    My brother said it the best in describing how stupid the PDT rule is. Is the stock market not the biggest casino in the world. How come i am restricted in placing more than 3 bets a week. I can go to a casino in Las Vegas and place as many bets as i want. Imagine if Casinos had a PDT rule. You can only gamble 3 times a week,but if you have $25,000 or more, you can unlimited gambling privileges. How insane is that!

  • Henry Lee

    My brother said it the best in describing how stupid the PDT rule is. Is the stock market not the biggest casino in the world. How come i am restricted in placing more than 3 bets a week. I can go to a casino in Las Vegas and place as many bets as i want. Imagine if Casinos had a PDT rule. You can only gamble 3 times a week,but if you have $25,000 or more, you can unlimited gambling privileges. How insane is that!

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  • http://www.mysnowpro.com/jonathanlawson Jonathan Lawson

    There are several issues with the regulations imposed on small traders (not necessarily unsophisticated).

    1) Limits execution of good trading discipline.
    If I enter a position, and set a stop target. I may be stopped out on the same day. If this happens 3 times in a rolling 5 day period (easy to do in current market conditions), the trader won’t be allowed to exit position 4 (risks’ catastrophic losses). And will have his acct locked for 90 days. For a crime against whom??

    2) Overly regulated. A maximum security society.
    Regulators are too concerned with keeping us “safe”. I don’t want regulated safety, like this. It is ok to provide safety against fraud, but not to regulate different laws for different financial levels of investors/accts. I have 4 accts i trade. In one brokerage acct over 100K, and 3 others below 25k. In one acct I am consider a “sophisticated” investor, yet the other accts I am not. What gives. I feel much more secure in my larger acct, and I am able to grow that acct more quickly because I am able to be more nimble as market conditions change.

    If I buy 4 equities on a given day, and Goldman Sachs does the same, yet later in the day something significant happens (i.e Middle eastern conflict), both GS and I decided we don’t want to be in those issues. Who losses? Me. GS exits their 4 positions, and I can only exit 3. If I choose to exit 4, my acct won’t let me or I am banned for trading that acct and labeled as a Pattern Day Trader. Who was this law designed to protect, it sure isn’t me.

    3) Outdated regulation.
    Although this regulation is only 3 years old, it is no longer relevant. Perhaps it was created to prevent overtrading and excessive commissions. Commissions are cheap. They are much less expensive than having to hold overnight positions in the case of a rapidly changing market condition.

    4) Who does it benefit?
    This teaches the average individual that they are not sophisticated enough to handle their own money. And suggests they should give their money to a large Money Manager who operates with different regulations. Submit to the system.

    I truly hope that the regulating institutions recount their decision, and repeal this Pattern Day Trader regulation.

  • http://www.mysnowpro.com/jonathanlawson Jonathan Lawson

    There are several issues with the regulations imposed on small traders (not necessarily unsophisticated).

    1) Limits execution of good trading discipline.
    If I enter a position, and set a stop target. I may be stopped out on the same day. If this happens 3 times in a rolling 5 day period (easy to do in current market conditions), the trader won’t be allowed to exit position 4 (risks’ catastrophic losses). And will have his acct locked for 90 days. For a crime against whom??

    2) Overly regulated. A maximum security society.
    Regulators are too concerned with keeping us “safe”. I don’t want regulated safety, like this. It is ok to provide safety against fraud, but not to regulate different laws for different financial levels of investors/accts. I have 4 accts i trade. In one brokerage acct over 100K, and 3 others below 25k. In one acct I am consider a “sophisticated” investor, yet the other accts I am not. What gives. I feel much more secure in my larger acct, and I am able to grow that acct more quickly because I am able to be more nimble as market conditions change.

    If I buy 4 equities on a given day, and Goldman Sachs does the same, yet later in the day something significant happens (i.e Middle eastern conflict), both GS and I decided we don’t want to be in those issues. Who losses? Me. GS exits their 4 positions, and I can only exit 3. If I choose to exit 4, my acct won’t let me or I am banned for trading that acct and labeled as a Pattern Day Trader. Who was this law designed to protect, it sure isn’t me.

    3) Outdated regulation.
    Although this regulation is only 3 years old, it is no longer relevant. Perhaps it was created to prevent overtrading and excessive commissions. Commissions are cheap. They are much less expensive than having to hold overnight positions in the case of a rapidly changing market condition.

    4) Who does it benefit?
    This teaches the average individual that they are not sophisticated enough to handle their own money. And suggests they should give their money to a large Money Manager who operates with different regulations. Submit to the system.

    I truly hope that the regulating institutions recount their decision, and repeal this Pattern Day Trader regulation.

  • YngvaiMalmsteve

    Hey, Jonathan, those are AWESOME points. You should write a letter to the SEC regarding all those points. It may not do any good, but if we get enough traders writing letters (I’ve written 2 to the SEC and one to FINRA), giving logical reasons as to why this rule hurts us (not emotional rants or anything like that), maybe…just maybe…someone will eventually listen. I doubt it, but it’s better than just complaining to each other about it.

    The key is to clearly outline how this rule hurts traders rather than helps them.

  • YngvaiMalmsteve

    Hey, Jonathan, those are AWESOME points. You should write a letter to the SEC regarding all those points. It may not do any good, but if we get enough traders writing letters (I’ve written 2 to the SEC and one to FINRA), giving logical reasons as to why this rule hurts us (not emotional rants or anything like that), maybe…just maybe…someone will eventually listen. I doubt it, but it’s better than just complaining to each other about it.

    The key is to clearly outline how this rule hurts traders rather than helps them.

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  • daniel

    i closed my account due to this terrorist rule.
    i now trade stocks through CFD trading (contracts for difference).
    (non legal for US citizens).

    more commissions but great leverage and no PTD

  • daniel

    i closed my account due to this terrorist rule.
    i now trade stocks through CFD trading (contracts for difference).
    (non legal for US citizens).

    more commissions but great leverage and no PTD

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  • Chris

    After I was finally able to scrounge up 5 grand to start daytrading, I opened an account. Now this dumb rule lets me trade one day a week before I’ve exhausted my 4 trades. I can’t get any experience or make any profits like this. What am I supposed to do, sell my house?

  • Chris

    After I was finally able to scrounge up 5 grand to start daytrading, I opened an account. Now this dumb rule lets me trade one day a week before I’ve exhausted my 4 trades. I can’t get any experience or make any profits like this. What am I supposed to do, sell my house?

  • El Dorado

    I have been flagged twice in the past year. The first time the brokerage simply called me, we talked and nothing was done. The second time the brokerage took away the “margin” part of my account until I wrote a letter explaining what my intentions were. I did this and the next day margin was restored.

    I think the rule is preposterous while simultaneously believing that people absolutely have to be held responsible for making sure they have enough cash to cover any calls for additional equity to cover trades.

    Self-regulation is in the toilet because of current events and while we can try to cast blame on someone else; if too many people blow it the rest of us will pay for it by losing privileges.

  • El Dorado

    I have been flagged twice in the past year. The first time the brokerage simply called me, we talked and nothing was done. The second time the brokerage took away the “margin” part of my account until I wrote a letter explaining what my intentions were. I did this and the next day margin was restored.

    I think the rule is preposterous while simultaneously believing that people absolutely have to be held responsible for making sure they have enough cash to cover any calls for additional equity to cover trades.

    Self-regulation is in the toilet because of current events and while we can try to cast blame on someone else; if too many people blow it the rest of us will pay for it by losing privileges.

  • http://none skEwb

    Timothy you are my hero! I wanted to follow the same sort of strategy you used when you went from poor to rich. I had not seen your website before today, but I sent this letter in to the SEC prior to reading this article.

    You are a true man with high knowledge and integrity. I have high respect for you and I will let you read the letter I sent to the SEC below. Please continue your hard work against this Pattern Day Trader injustice.

    The letter as follows:

    “I just want to say that the pattern day trade rule is absolute junk. Why is the SEC protecting me from myself? Is the SEC trying to say I’m stupid and I can’t make my own day trade decisions?

    Why does having $25,000 make a difference? If I have less money than this does this put me in a bracket I’m not supposed to attain? Therefore I must be locked out and discriminated on my trading abilities because I have LESS money?

    I can buy as much as I want but I can’t put in a sell limit because I’ve been identified as a pattern day trader without the minimum $25,000. How does this make sense? The SEC is saying you can’t keep short term gains you have to go long unless you already have a lot of money.

    Does the SEC even realize how Unfair this is?

    You need to eliminate pattern day trading and let the free markets be free. Right now it’s dictator market not free trade market. Because you’re forcing me in a position I don’t want to be in.

    What’s next? Are we going to need $50,000 in an SEC approved bank to file a complaint?”

  • http://none skEwb

    Timothy you are my hero! I wanted to follow the same sort of strategy you used when you went from poor to rich. I had not seen your website before today, but I sent this letter in to the SEC prior to reading this article.

    You are a true man with high knowledge and integrity. I have high respect for you and I will let you read the letter I sent to the SEC below. Please continue your hard work against this Pattern Day Trader injustice.

    The letter as follows:

    “I just want to say that the pattern day trade rule is absolute junk. Why is the SEC protecting me from myself? Is the SEC trying to say I’m stupid and I can’t make my own day trade decisions?

    Why does having $25,000 make a difference? If I have less money than this does this put me in a bracket I’m not supposed to attain? Therefore I must be locked out and discriminated on my trading abilities because I have LESS money?

    I can buy as much as I want but I can’t put in a sell limit because I’ve been identified as a pattern day trader without the minimum $25,000. How does this make sense? The SEC is saying you can’t keep short term gains you have to go long unless you already have a lot of money.

    Does the SEC even realize how Unfair this is?

    You need to eliminate pattern day trading and let the free markets be free. Right now it’s dictator market not free trade market. Because you’re forcing me in a position I don’t want to be in.

    What’s next? Are we going to need $50,000 in an SEC approved bank to file a complaint?”

  • flex

    of course the reason is to ensure that only serious professionals attempt to day trade. its not gambling, and most of the fools who mess with it lose their money. so its even somewhat benign that the SEC tries to limit them. otherwise you would say it was a scam to entice any fool with a few thou to come give them up to the market.

    or you could trade futures for much less. or options.

  • flex

    of course the reason is to ensure that only serious professionals attempt to day trade. its not gambling, and most of the fools who mess with it lose their money. so its even somewhat benign that the SEC tries to limit them. otherwise you would say it was a scam to entice any fool with a few thou to come give them up to the market.

    or you could trade futures for much less. or options.

  • skEwb

    Well if Tim turned 12k into 1.65 million who’s to say nobody else can do the same? That’s ok though, the SEC and US traders wont get my business. I’ll take it to Canada. Their brokers will gladly charge me trading fees and let me keep my profits so I can get to that $25k.

    If someone inherited money and has $25k or more it doesn’t make them any smarter than someone with less money that really knows how to use it to make more.

    Stocks are pretty much gambling, once you put in your money in a stock and you’re labeled a pattern day trader you lose control. That stock could go up or down and it is not your decisions. This is pretty much gambling, but gambling with limits!

    I don’t want to be protected If i have a few thousand to lose it’s my choice to lose it.

  • skEwb

    Well if Tim turned 12k into 1.65 million who’s to say nobody else can do the same? That’s ok though, the SEC and US traders wont get my business. I’ll take it to Canada. Their brokers will gladly charge me trading fees and let me keep my profits so I can get to that $25k.

    If someone inherited money and has $25k or more it doesn’t make them any smarter than someone with less money that really knows how to use it to make more.

    Stocks are pretty much gambling, once you put in your money in a stock and you’re labeled a pattern day trader you lose control. That stock could go up or down and it is not your decisions. This is pretty much gambling, but gambling with limits!

    I don’t want to be protected If i have a few thousand to lose it’s my choice to lose it.

  • Me

    I opened an account a few days ago and wanted to get into the swing of this recent bottoming out with some extra cash I have. I figured it would be interesting to see where it goes and the money wasn’t anything I’d miss if I lost it (2500). I’ve made a few trades and am up 16.6% in 3 days (account is in cash at $2923). I could stop now and outperform my sad 401k mut funds. Anyway, on my last trade I get this notice saying I’m a pattern day trader. No shit! I call up the broker and tell them what happened and they tell me I can’t day trade, it’s the rules, and they’ve exempted my account one time but I better not continue. What a crock of shit. So now I guess I have to find stocks I’m comfortable holding overnight, which is none. This market is messed up one day to the next, with a LIBOR rate in london tanking an auto stock in detroit the next morning. This is frustrating me because I could put 25000 on the line by going into a LOC I have, but that would be a risk to me, while 2500 simply is spare cash. Isn’t this the opposite of what they wanted to accomplish? Ridiculous.

  • Me

    I opened an account a few days ago and wanted to get into the swing of this recent bottoming out with some extra cash I have. I figured it would be interesting to see where it goes and the money wasn’t anything I’d miss if I lost it (2500). I’ve made a few trades and am up 16.6% in 3 days (account is in cash at $2923). I could stop now and outperform my sad 401k mut funds. Anyway, on my last trade I get this notice saying I’m a pattern day trader. No shit! I call up the broker and tell them what happened and they tell me I can’t day trade, it’s the rules, and they’ve exempted my account one time but I better not continue. What a crock of shit. So now I guess I have to find stocks I’m comfortable holding overnight, which is none. This market is messed up one day to the next, with a LIBOR rate in london tanking an auto stock in detroit the next morning. This is frustrating me because I could put 25000 on the line by going into a LOC I have, but that would be a risk to me, while 2500 simply is spare cash. Isn’t this the opposite of what they wanted to accomplish? Ridiculous.

  • Bruce

    Couldn’t agree with you more. Over the past week, this rule has cost me substantial gains. Friday I was screaming at my computer knowing that a $2k gain could easily turn into a $6k loss on Monday morning. My dilemma, either go flat and trigger the rule or hold over the weekend and face a potential market meltdown on Monday. Riding the 4 trade limit for the past couple of weeks and having given back hundreds in gains by being forced to hold over night or trigger the rule–right now I’d gladly trade my position for a $500 loss, just for peace of mind and to avoid exposure on market open on Monday.

    In the current market, with the extreme volatility, I’ve never seen greater risk/reward opportunities. The irony is that I just had a CD mature and will cover the $25k requirement on Monday IF I don’t get nailed with a big market open down on Monday. My point is that even conservative swing traders such as myself in a volatile market such as we now have are presented with the dilemma of either protecting profits and cutting losses or losing profits and increasing losses by this rule.

    Well, I’m capitulating. A severe sell off on Monday will lose my broker a very active trader or conversely, if the market holds, I am forced to have what will often be dead money sitting in my account. The rule is stupid–no one can override the old saying “a fool and his money are soon parted” by hurting the rest of us.

  • Bruce

    Couldn’t agree with you more. Over the past week, this rule has cost me substantial gains. Friday I was screaming at my computer knowing that a $2k gain could easily turn into a $6k loss on Monday morning. My dilemma, either go flat and trigger the rule or hold over the weekend and face a potential market meltdown on Monday. Riding the 4 trade limit for the past couple of weeks and having given back hundreds in gains by being forced to hold over night or trigger the rule–right now I’d gladly trade my position for a $500 loss, just for peace of mind and to avoid exposure on market open on Monday.

    In the current market, with the extreme volatility, I’ve never seen greater risk/reward opportunities. The irony is that I just had a CD mature and will cover the $25k requirement on Monday IF I don’t get nailed with a big market open down on Monday. My point is that even conservative swing traders such as myself in a volatile market such as we now have are presented with the dilemma of either protecting profits and cutting losses or losing profits and increasing losses by this rule.

    Well, I’m capitulating. A severe sell off on Monday will lose my broker a very active trader or conversely, if the market holds, I am forced to have what will often be dead money sitting in my account. The rule is stupid–no one can override the old saying “a fool and his money are soon parted” by hurting the rest of us.

  • donald cornett

    where can I get level-2

  • donald cornett

    where can I get level-2

  • van cornelius

    Amen. It makes my blood boil that the jackasses limit my freedom to determine what risks I can take and to get out of a trades when I want to.
    Do they think that they are officials in the old USSR. Why has a massive protest of daytraders against this adomination not been mounted? How could this be done? Call your reprentatives in Congres!!!!!!!!!!! Has any group been formed to protest this nonsense?

  • van cornelius

    Amen. It makes my blood boil that the jackasses limit my freedom to determine what risks I can take and to get out of a trades when I want to.
    Do they think that they are officials in the old USSR. Why has a massive protest of daytraders against this adomination not been mounted? How could this be done? Call your reprentatives in Congres!!!!!!!!!!! Has any group been formed to protest this nonsense?

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  • Larry

    I have always believed that the day trading rule is anti-small business. Think about it, does the government regulate how much money you can invest in and use to further any other type of business? The SEC, in creating this rule, is trying to prevent gamblers and the inexperienced from losing their money. Fine. Any professional trader will tell you, YOU WILL lose money when in the learning process. Even if you’re not day trading you can STILL lose money in the stock market. LOL did I even need to say that? In order to get better a trader has to learn from experience. That’s the reality of the business, and for that matter any business. Do some companies that sell widgets lose money in the first few years of existence? Of course they do. For me, day trading is a business, but it doesn’t mean a trader always makes a zillion trades per day. I usually make a maximum of 4 trades per day, and still this stupid rule would prevent me from furthering my business. People lose money in the stock market every day whether day trading or not. I am surprised this rule has stood for so long, and really surprised there hasn’t been lawsuits based on unnecessary anti-business regulation to take it down. One compromise might be that if the trading entity is a business entity, ie, LLC, S-corp, etc, the rule would not apply. It’s just a business trying to make money like any other business. And, the fact you formed an entity means you’re serious. It’s so easy to knock down the reasoning behind this rule. People need to write their local congressman and knock it down once and for all.

  • Larry

    I have always believed that the day trading rule is anti-small business. Think about it, does the government regulate how much money you can invest in and use to further any other type of business? The SEC, in creating this rule, is trying to prevent gamblers and the inexperienced from losing their money. Fine. Any professional trader will tell you, YOU WILL lose money when in the learning process. Even if you’re not day trading you can STILL lose money in the stock market. LOL did I even need to say that? In order to get better a trader has to learn from experience. That’s the reality of the business, and for that matter any business. Do some companies that sell widgets lose money in the first few years of existence? Of course they do. For me, day trading is a business, but it doesn’t mean a trader always makes a zillion trades per day. I usually make a maximum of 4 trades per day, and still this stupid rule would prevent me from furthering my business. People lose money in the stock market every day whether day trading or not. I am surprised this rule has stood for so long, and really surprised there hasn’t been lawsuits based on unnecessary anti-business regulation to take it down. One compromise might be that if the trading entity is a business entity, ie, LLC, S-corp, etc, the rule would not apply. It’s just a business trying to make money like any other business. And, the fact you formed an entity means you’re serious. It’s so easy to knock down the reasoning behind this rule. People need to write their local congressman and knock it down once and for all.

  • Larry

    I forgot to mention in my reply that with the advent of simulation trading, one can now learn trading without losing any money. Simulation trading has in my opinion revolutionized the odds of success for anyone getting into this business.

  • Larry

    I forgot to mention in my reply that with the advent of simulation trading, one can now learn trading without losing any money. Simulation trading has in my opinion revolutionized the odds of success for anyone getting into this business.

  • Paul

    The logic doesn’t wash! The part that you are leaving out is the margin requirement. If they are out to protect investors, why do they require it be a margin account. This is the only way that you can lose more than you have. The rule is meant to keep traders with limited capital from getting in and out with small unnoticed (profitable) trades. It is about protecting the big guy not the small guy. It is typical American Aristocratic BS.

  • Paul

    The logic doesn’t wash! The part that you are leaving out is the margin requirement. If they are out to protect investors, why do they require it be a margin account. This is the only way that you can lose more than you have. The rule is meant to keep traders with limited capital from getting in and out with small unnoticed (profitable) trades. It is about protecting the big guy not the small guy. It is typical American Aristocratic BS.

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  • Jon

    This rule has cost me so much money!!

    I need to find Bin laden and hire him to off all the SEC board with my $23,000

    MAD as HELL!!

  • Jon

    This rule has cost me so much money!!

    I need to find Bin laden and hire him to off all the SEC board with my $23,000

    MAD as HELL!!

  • van

    I agree. The day trade rule is stupid. Now they are about to adopt a rule limiting short selling. This all because a bunch of ignorant policians want to score points with their ignorant consituents. How about some leadership fo a change? They can protect traders by simply requiring that they be warned of risks, but allowing them the freedom to choose what risks to take. Tne SEC seems to base its rules more on politics than on reson and fairness.

  • van

    I agree. The day trade rule is stupid. Now they are about to adopt a rule limiting short selling. This all because a bunch of ignorant policians want to score points with their ignorant consituents. How about some leadership fo a change? They can protect traders by simply requiring that they be warned of risks, but allowing them the freedom to choose what risks to take. Tne SEC seems to base its rules more on politics than on reson and fairness.

  • Van

    By the way, once the SEC comes out with proposed short-selling rules br sure to sent you comments to their websites,

    I don’t bevlieve that short-selling drives down stocks any more then buying a hot stock drives up the stock. Plus short sellers are traders (not investers) , so that when they short sell, they are creating a buy in the probably near future, thus providing future price support.

  • Van

    By the way, once the SEC comes out with proposed short-selling rules br sure to sent you comments to their websites,

    I don’t bevlieve that short-selling drives down stocks any more then buying a hot stock drives up the stock. Plus short sellers are traders (not investers) , so that when they short sell, they are creating a buy in the probably near future, thus providing future price support.

  • Van Cornelius

    The SEC is now taking comments on proposed short-selling rules. Please consider submitting your comments. You could, while you are at it, lambash the stupid pattern day trading rule. I just did. Read my comments on their site if ; you like.

  • Van Cornelius

    The SEC is now taking comments on proposed short-selling rules. Please consider submitting your comments. You could, while you are at it, lambash the stupid pattern day trading rule. I just did. Read my comments on their site if ; you like.

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  • Anonymous

    Well, I see the suffering here… let me summarize mine
    1. Blocked from cutting my losses, being forced to hold on to losing trades because of someone’s infinite stupidity or evil, I do not know, even as my small pie gets smaller
    2. Unable to book profits, of course, especially on above 15% a day breakouts
    3. Unable to sell covered calls to lock profit in on breakout, having bought the call back in the morning before the breakout
    4. Blocked from protecting my portfolio – unable to buy puts even as I see the market slide down, because I have already crossed my ‘limit’ of 4…

    I understand this rule was put in place by SEC at the behest of NYSE and NASDAQ after the 2000 bubble burst.
    I have written to the SEC, as I am sure many of you have, but is anything happening at all?

  • soulartist

    Well, I see the suffering here… let me summarize mine
    1. Blocked from cutting my losses, being forced to hold on to losing trades because of someone's infinite stupidity or evil, I do not know, even as my small pie gets smaller
    2. Unable to book profits, of course, especially on above 15% a day breakouts
    3. Unable to sell covered calls to lock profit in on breakout, having bought the call back in the morning before the breakout
    4. Blocked from protecting my portfolio – unable to buy puts even as I see the market slide down, because I have already crossed my 'limit' of 4…

    I understand this rule was put in place by SEC at the behest of NYSE and NASDAQ after the 2000 bubble burst.
    I have written to the SEC, as I am sure many of you have, but is anything happening at all?

  • your Fictional Friend

    This rule Totaly Targets small Traders who are usually not the ones to Bring economic collapses but the Large Investors/traders, This was Very deliberate to point the finger @ someone & we all know the Large traders are not gonna take the hit & just pass along the Pain to the small guys with the support of Government to add on it. This Pattern day trader not Only limit your profits by putting controlling your trading frequency which obviously is quite illogical when it comes to day trading because we all know the markets change every minute of the day but also bring traders to irrational and even dangerous trades that put them in situations where they cant come out because the cant exit or either be banned from trading. This rule is obvious of SEC/Government putting filling in the holes where people find ways to get out YES, THE RAT RACE! ….RUN RATS RUN THERE COMING FOR YOU!

  • Van cornelis

    The argument against government (SEC) rules limiting daytrading is that I should be allowed to determine what risks that I take. It my money. A simple rule requiring that brokers get a signed statement warning of the dangers of short-term trading should in a free country suffice without depriving me of my freedom. My broker did not pressure me into short-term trading. I am sure that he would like me to be successful, so that I could be a long-term client.

  • Van Cornelius

    Someone wondered why a class-action suit has not been filed. So have I. I talked to a securties lawyer. He says that government regulatory agencies are shielded from suits challenging their actions no matter how harmful or stupid. The SEC is a government agency. FINRA (a self-monitoring independent organization making rules for brokers) is not. However most brokers belong to it. They both have identical rules governing “pattern daytrading. FINRA could be sued, but then there would still be the SEC. Call your Senator and US Representative. It can’t hart.

  • Van Cornelius

    Me too. It makes me so mad.

  • Van Cornelius

    Just for your information, NASD and the NYSE combined. I believe this was in 2007. They were probably responding to a bunch of greedy crybabbies who lost money and felt the government should have protected them from themselves. My guess is that predictory daytrading rooms which did not warn their clients of the dangers may have had more to do with the pattern daytrading rule than the tech bubble. I just wish the government would let me decide what risk I will take.

  • Van Cornelius

    To clarify my lasT post. The NASD and the NYSE obviously did not combine. They merged their regulaatory functions into FINRA.

  • Pat

    The PDT rule is ridiculous, but applying it to casino gambling really shows how ridiculous it is:

    You walk into a casino and start playing some hands. You play 3 hands and then play another hand. The dealer says “Show me that you have $25K here at the table” but you only have $3K so he says: “Sorry buddy, you can only play 3 hands, on the 4th hand you’ll have to pull $25K out of your pocket and show us or you’ll have to wait for 5 days to play a 4th hand. If you play more than 3 hands in 5 business days and can’t show us the $25K we’re going to have to hold on to all the money you brought in here to gamble with, for 90 days. You can have access to your $3k in 90 days for another hand but make sure to not play more than 3 hands in 5 business days again”.

  • mike

    today was a prime example of having a balance under 25k and not wanting to sell out on my 2nd round trip of the day. It only cost me $407 dollars not to trade the stock that closed just above my purchase price now. The pattern day trading rule is criminal and it hurts the small trader and does not help them. I hate the rule. My trading account is almost at 22k now so I M hoping to break above the 25k limit and free myself from the SEC BINLaden crap.

  • Anonymous

    These rules are keeping liquidity out of the market when it is needed most. I accept them as rules made to keep the “haves” from losing money to the “up and comings”. I recently took a nap after close and woke up to a 50 cent increase after market. Sold out at a nice profit and Wham!!!!!. In my groginess I forgot I had bought shares in seperat increments that same day….. after I had quickly opened a position in another stock. So in 2 minutes, I accidently became a PDT and also Broke the RULES of PDTing. SO as yet I am in the SEC Outhouse waiting while the market screems for more liquidity.

  • Oc_law

    The subtleties of the PDT Rule are a real pain in the ass. I just got my margin suspended due to a PDT violation that I had utterly no idea was a pattern day trade. On 6/8 I shorted 1400 shares of IRIS. On 6/9 I bought 200 shares to cover (leaving 1200 shares short from the prior day), later the same day I shorted 515 more shares of IRIS (total shares short now = 1715) then I bought 400 more to cover (leaving 1315 shares still short). Though I had 1200 shares short from a position created on 6/8, when I bought the 400 shares to cover those 400 shares were deemed to be the shares that were sold short earlier in the day, rather than attributing them to the 1200 shares shorted on 6/8.

    I keep copious notes of day trades on a monthly calendar just to avoid this POS rule. Still can’t win when they stack the deck against you. So pissed right now.

  • PENDRISS

    Rediculous rule, they don’t govern how much money you can bring to a casino and how many bets can be placed there so how can they govern this which is a “free” individuals right to manage their own money without the SEC getting involved. I hope this regulation/rule gets s%&t canned soon God forbid I make more money????!!!!!

  • disabled

    You got money, then you got power.
    This is no longer the country of the free and the brave.
    This is a country of people who tell other people what to do and what not to do.
    A country of and for socialists and lobbyists.

  • David

    TO HELL WITH THE SEC

    Those bunch of crooked idiots at the SEC. They couldn’t even catch a $50 Billion dollar fraud when it was repeatedly pushed in their faces. The pattern day trader rule hurts the little person more than it helps. It is just ment to keep more money in the market for the big players to grab and to force us to deposit more money with the brokers. That rule is a bunch of crooked crap. 

    Thank God for offshore brokers who are not subjected to those rules. 

  • David

    I MUST AGREE

    America is not what it use to be. Even people in third World countries are seeking the Euro more than they are seeking the dollar. 

    Anyone who has studied American law will know that we are NOT free. We have more laws than any country in the World that restricts our movements and possessions. It is a police country where people like Martha Stewart can be thrown in jail for the mistakes of her accountant, or thrown in jail for sending an bad email. 

    There are better countries in World than America. 

  • David

    TO HELL WITH AMERICAN BROKERS

    Use offshore brokers to avoid this SEC stupid rule. The hell with the SEC and their harmful rules. 

  • David

    MOVE YOUR MONEY OUT OF AMERICA

    Just move your money to an offshore broker and to hell with the SEC and the brokers enforcing that stupid law. 

    Not only is America losing their major corporations to China; but this stupid rule is also taking cash from American brokers and putting it into the pockets of overseas brokers. All these damn laws are starting to bring America down. 

    America is law crazy. 

  • David

    TO HELL WITH THE SEC

    Those bunch of crooked idiots at the SEC. They couldn't even catch a $50 Billion dollar fraud when it was repeatedly pushed in their faces. The pattern day trader rule hurts the little person more than it helps. It is just ment to keep more money in the market for the big players to grab and to force us to deposit more money with the brokers. That rule is a bunch of crooked crap. 

    Thank God for offshore brokers who are not subjected to those rules.

  • David

    I MUST AGREE

    America is not what it use to be. Even people in third World countries are seeking the Euro more than they are seeking the dollar. 

    Anyone who has studied American law will know that we are NOT free. We have more laws than any country in the World that restricts our movements and possessions. It is a police country where people like Martha Stewart can be thrown in jail for the mistakes of her accountant, or thrown in jail for sending an bad email. 

    There are better countries in World than America.

  • David

    TO HELL WITH AMERICAN BROKERS

    Use offshore brokers to avoid this SEC stupid rule. The hell with the SEC and their harmful rules.

  • David

    MOVE YOUR MONEY OUT OF AMERICA

    Just move your money to an offshore broker and to hell with the SEC and the brokers enforcing that stupid law. 

    Not only is America losing their major corporations to China; but this stupid rule is also taking cash from American brokers and putting it into the pockets of overseas brokers. All these damn laws are starting to bring America down. 

    America is law crazy.

  • http://www.cashforgolddenver.com/ Thomasrosquin

    Researching Pattern Day Trading, I still cannot figure out why there is a need for these restrictions?  I mean who cares? What business does the SEC have with how I trade? Although now I’m realizing this has to do with margin accounts. So the everyday trader doesn’t have to worry because we trade in real money?

  • Marc Munoz

    I wish this page was easier to find.  Yea please start a petition of this rule and
    I’ll sign it as will all the traders in the chats rooms all over the internet because the PDT rule is stupid and I even went so far as to file a complaint about that rule to the SEC.  It is a stupid rule costing me money when I cannot cut my loses quickly because I am forced to hold stocks over night or face 90 days of punishment for trying to make money.  Small cap traders who trade penny stock don’t have 25K to fund a day trader account and of course they can not afford to buy stocks like apple so we are just screwed over by a rule that is just plain stupid.
    Please if you read this go to the SEC website and file a complaint of this stupid rule.  Perhaps if enough of us write complaints they will notice. 

  • Bill

    If one buys a call or a put and looses, who gets hurt? The guy who made the purchase. The only one who looses is that person, not the government, not the brokerage. This is the way we learn to trade. The SEC should not be in the business of protecting the trader from himself/herself. I want the freedom to make or loose money without interference of an entity protecting me from my self. Understand we are all adults and should not be protected from ourselves.
         If the SEC wants to get involved in protection, do a better job of protecting the unsuspecting public from scam artists who perpatrate ponzi schemes. In this they have failed entirely and miserably as per recent example.
         I too wish someone would start a petition against this stupid rule….I would gladly sign it.
    bc

  • Vasil S.

    Both my brokerage accounts are hit by PDT rule. Now, I can only play 3-4 times a week per account. Is the SEC willing to tell me which are the best trades for me to execute for that week? No? You mean my ability to learn by trial and error is taken away because I’m not already wealthy? Someone explain to me how the people running this country are dumber than the people driving its economy.

  • David

    The PDT rule has caused me to loose money. The number of possible trades per 5 day trading period are always in the back of my mind clouding my decision making process. The number is actually 3 – not 4. 4 trades will get a person flagged for PDT. And sure – one PDT flag can be removed every 6 months – big deal.

    So how does this PDT actually cause me to loose money? Because I can’t take on additional trades that have a potential for creating profit? Not so much – but that certainly would be a nice option to have too. I mainly lose money from the PDT rule from holding positions too long when they are turning against me. The thought pattern the PDT rule creates is this “OK – This trade is not looking good. But wait, if I sell now that will be 1 day trade. Let’s say I do sell now and reenter at a more favorable price or decide to trade a completely different equity. Well if I get back in this stock or decide to trade a different stock, I may need a way to get back out before the day is over. How many day trades do I have left? Maybe I’ll just wait and see if this current position is just correcting or a bounce will occur. Sometimes we have to be flexible – right?” And about 50% of the time the stock price does improve. The other 50% of the time the situation only gets worse. And, of course we can always hold the stock overnight to avoid the PDT rule. And sometimes they gap up and other times they gap down.

    And that was a perfect analogy, Tim! The PDT rule is like limiting an artist to 3 brush strokes per week. And, of course, if the artist broke the rule, then they would have to deposit 25K dollars in an account or else face being locked out of their painting for months and they would be restricted to only removing brush strokes.

    Trading is an art and skill that has to be learned. I owe many thanks to Tim and others who have produced excellent information on this skill. And I have come a long way in a shorter period of time because of them. However, I find the PDT rule almost unbearable and a brick wall for success.

  • David

    lose, that is. Maybe that’s part of the problem, too.

  • George

    Can I have an Amen!? I just got labeled a “pattern day trader” yesterday, and did NOT understand the limitations. All Scottrade tells you is to maintain a $25000 account. Well, I thought, no problem. But guess what?! It’s not just that. Today I sold at the high, made a nice profit, tried to buy back in on the dip, AND I WASN’T ALLOWED! No, there’s something called a “day trading buying power” that says i can’t buy over amount X. What?? You know what this is? It’s not letting the little guy make money. You see, if you’re filthy rich, you can play with all the cash you want. Put in 500k, ride it long, and you’ll make big money, but if you only have 40 or 50 to work with, you have to flip the same stock over and over to make big money. It’s the only way to do it with limited funds. But we’re not allowed to do that! A**holes!!!!!! There. Now I feel a little better.

  • John

    This rule has really screwed me over. I’m surprised no one has started a petition yet, because it is our right as Americans to trade these stocks however we please

  • Evan

    Simply a great and truthful post.

  • Reg

    This rule us killing me.. smh..

  • me vyes

    only in mother f**King america i guess

  • me vyes

    u get money and u gtfo of this country before ur money and opportunities goes away

  • Timmanipulatesyourmind

    I think a lot of it has to do with out dated models the SEC deems accurate. In particular, the efficient market theory. They don’t want retail investors betting money on short term movements because the SEC believes markets are random, and therefore it is gambling, a game of pure chance. They also want to preserve the “integrity of the capital markets” whatever the fuck that means. Bottom line, they are complete utter idiots for making this rule. It has cost me so much fucking money and frustration it is unbelievable. I have had to resort to a cash account after been tagged pdt. I am now a student, reapplied for margin, they denied because I am in school. The last 5 trades, if I could have exited when I wanted, and not waited for the fucking cash to settle, I would have made nice profits. Instead, I got 1 lucky win after the position reversed on me after the place I wanted to exited and then luckily bounced, and 4 fucking losses that would have been winners again if it was a margin account, all thanks to the PDT rule. Stupid fucking assholes!

  • Linus Riesnert

    When all the paternalism of the SEC for retail traders is true, then why is PDT rule only in the stock markets? You can lose way more money trading mini futures or forex than trading stocks.