What Is the Pattern Day Trader Rule And Why You Do NOT Need $25,000 To Trade Stocks - Timothy Sykes

What Is the Pattern Day Trader Rule And Why You Do NOT Need $25,000 To Trade Stocks

As for the $25,000 figure, the confusion comes from the US regulators instituting the much maligned “Pattern Day Trader Rule

Understand first that brokers want you trading all of the time, because they make money on commissions and in order to trade all the time freely, you need $25,000…but if you truly want to get wealthy, you shouldn’t be listening to what your broker says, you should listen to what actually works, as proven by my top Millionaire trading challenge students and I.

Download the key points of this post as PDF.

I hope you’re enjoying this free new guide I created, but, more importantly, I want to cut through the BS unethical brokers like to spread, like that you can’t short sell penny stocks (yes you can, you just need the right broker, as I outline HERE), or that you need to trade intraday, every day to get rich (no, that’s how you make your broker rich) or that you need $25,000 to truly trade stocks as that’s all BS as you’ll understand after you read this article.  So, from now on, I will just forward anyone who spreads or believes that lie to this blog post.

Here’s a short summary:

Under the rules, a pattern day trader must maintain minimum equity of $25,000 on any day that the customer day trades. The required minimum equity must be in the account prior to any day-trading activities.

So, that would suggest that, yes, you do need $25,000 to partake in “day trading activities.”  But, that’s only if you fit the definition of a day trader, which is:

A pattern day trader is a stock market trader who executes four or more day trades in five business days in a margin account.

You also can get more leverage to use if you have over $25,000.  Some brokers offer 4 to 1 or even 6 to 1, meaning if you have just $1,000, you can now gamble with $4,000 or even $6,000…and I use the word “gamble” on purpose, because my top Millionaire trading challenge students and DO NOT GAMBLE AND DO NOT USE LEVERAGE and I would not encourage anyone to, especially not newbies, as stocks can move faster than you’re prepared to cut losses quickly and so your losses can REALLY pile up when taking positions with borrowed money.

So, yes, my top Millionaire trading challenge students and I are PERFECTLY happy to make three or less, not four or more, day trades per week to fit comfortably under the PDT rule and you must remember that too many people don’t realize that if you simply hold a stock overnight, it doesn’t count as a day trade, so you could theoretically trade stocks EVERY day.  As long as you hold the stock overnight, it doesn’t count as a day trade!

I will repeat this, because some people have problems believing it, the Pattern Day Trader Rule does NOT limit you from making more than 3 trades per week.  You can hold a stock or even 2 or 3 stocks overnight, every single night, but you are limited on your intraday trading to just 3 intraday trades per week.  Given your small account size and likely lack of experience (hence the small account size), THIS IS A GOOD THING, so that you don’t churn and burn your account to ashes like too many newbies do, trying to catch every single stock and every single move up and down all over the place like a friggin rabid hyena.

But, if you hate the PDT Rule, I get it as I also used to hate the Pattern Day Trader Rule, or PDT Rule for short.  A decade ago, when I just got started teaching, I wrote a ridiculously ignorant blog post “Why The Pattern Day Trader Rule Proves The SEC Rivals Osama Bin Laden In Terrorism” which I would now love to delete.  But, I’ll keep it up to show you how dumb and bitter I used to be…just like many of you newbies who also decry the PDT Rule!

Over the past 10+ years of teaching, I’ve learned what works best for students and over-trading is a HUGE issue that ends too many people’s accounts and financial educations early.  The PDT Rule only helps save people…especially newbies…from themselves.

And, if you watched this great interview with one of my upcoming Millionaire trading challenge students:

…you would realize that you DO NOT need the ability to make “four or more day trades in five business days,” because that’s a SHITLOAD of trading and my top students and I have learned to have patience and wait for the best plays, which only pop up once every few days or even every few weeks, if you want to be truly disciplined.

I know, I know, it’s tough to watch the market day in and day out and not trade, so I encourage everyone with itchy fingers to practice, practice, practice using the new paper-trading feature on this must-have software and not to take too much away from your “paper profits,” because it’s far easier when it’s not real money and there’s no emotion attached to the trade…as it’s the emotional discipline that most people lack that causes 90%+ of traders to lose.

I know I’m throwing a lot of facts and concepts at you, so let me make it real simple:

YOU DON’T NEED TO TRADE AS MUCH AS YOU THINK YOU DO TO GET RICH.

IF YOU DO TRADE AS MUCH AS YOU THINK YOU NEED TO, YOU WILL NEVER BE RICH.

Got it?

Check out this video of another one of my up and coming Millionaire trading challenge students, Mark Croock, who just passed $700,000 in trading profits:

A little while back, we looked at his trades and discovered 80% of his profits come from 6% of his trades…he’s been over-trading for years and only now, in 2017, has he controlled that urge to trade.  And, it’s no surprise that he’s having his best few months ever, making nearly $100,000 in 2017 already.

Or, if you really can’t control yourself and do want to make more than 3 day-trades per week, then follow the lead of my most successful trading challenge Student, who just passed $4 million in trading profits:

Back when he had just a few thousand dollars to his name, he opened multiple brokerage accounts and, even though he didn’t use the majority of the money in his accounts, he was free to make 3 day trades per week PER ACCOUNT, so I think he had the ability to make 6 or even 9 day trades per week, since he had 2-3 brokerage accounts.

There are lots of questionable brokers, prop firms and “hedge funds” that offer ways to avoid the PDT Rules.  But, as I wrote in the MUST READ blog posts, “My Brokers For 2017 And My Plan For You” and “Warning About Using These Wrong Brokers,” I would NOT use those, as the risk is simply too great…not to mention that I must reinforce that to truly grow your small account exponentially, you MUST study hard and learn to wait for the absolute best set ups, like those outlined in this blog post “How To Trade With A Small Account vs Big Account” and video lessons like THIS GREAT ONE and THIS GREAT ONE TOO.  So, the PDT Rule actually HELPS you have more patience.

After all, many of my top Millionaire and upcoming Millionaire trading challenge students began with less than $25,000 and those who began with more likely would be even further along now in their journey, if they had been faced with the challenge of growing their account with limits on how often they could trade…it’s a good problem, as I’ve shown a few times throughout my career here in the blog posts “Why I Just Checked Myself Into Prison” and “How To Turn $12,415 Into $90,368 In 2 Years [A BLUEPRINT],” both of which are about times when I had to patiently dig myself out of this regulatory “prison” and it made me a far better trader as a result.

Now, you do need $500, at least, to open a brokerage account at any of my preferred brokers (and no I have NO “IB agreements”  with either E*Trade or Interactive Brokers.  They don’t pay me a dime.  Actually, they both actually hate me, since I tell my students not to trade as much as they want you to!) and I would recommend starting with at least $2,000, if you want to short sell.  But, as I outlined in this other MUST READ blog post “What’s The Minimum Needed To Trade Penny Stocks?“, whether you start with $2,000 or $4,000 or $10,000, it might mean a lot to you now, but in the grand scheme of your life, this money is meaningless — all that matters is how quickly you learn GOOD habits and the right process to growing your account exponentially, not the bullshit 10-20% per year returns Wall Street bigwigs aim for so that they can pad their management fees and performance bonuses, but the amount that will keep you a slave all your life, as it doesn’t matter if you make an “astounding” 50% on $10,000 over the course of the year, it’s still just a lousy $5,000 in the real world, which doesn’t buy much and should NEVER be your goal.

I want you aiming for the stars, so that even if you miss, you’ll still be sitting on a private jet with me and my top Millionaire trading challenge students 🙂

And, revolutionary goal-setting/performance studies done by Harvard Professors Locke And Latham prove that your daily performance is increased quite dramatically when you have a big goal, as opposed to the survival goals of a scalper like too many traders are…that’s why I like posting pictures and videos of GIANTS stacks of cash, not little ones:

Here’s some #dailymotivation for you as unlike @shadmoss I don’t have to steal other people’s photos to pretend this is mine and even though I became a #millionaire roughly 15 years like #bowwow did too, I am relatively #frugal with it so I’m not sure how he spent all of his money! As for why I post pics and videos of #stacksonstacks like this all the time, it’s not to be a dick like a #trustfundbaby or to get you to buy music like a wannabe #rapper it’s to inspire my students to #studyhard as I teach everything you need to know about the #stockmarket so these are the rewards as #studyingpaysoff and I encourage you to look up the revolutionary #goalsetting studies done by Professors Locke and Latham, having #biggoals helps your daily performance! #ilovemyjob #dailyinspiration #dailydouche #thegoodlife #workhardplayharder #jewspiration #jewishbedspread #liljewjew

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Some say it’s irresponsible, since they think it’s impossible to achieve that.  But, since I personally started with a few thousand dollars to my name and now I have SEVERAL trading challenge students who have made $700,000+, $900,000+ and $2+ million and $4+ million in just a few years, I’m proving, one student at a time, that my strategy isn’t just luck…the strategy works.

Leave a comment below, if this makes sense to you and you’re going to cut the BS about whining about the PDT Rule and the $25k minimum and you’ll start studying and getting on the right path ASAP, no matter how much you have…

And, even if you’re totally broke, see these FREE resources HERE and HERE and HERE and HERE, so you have NO excuse not to study and learn (study first, trade FAR later)

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47 comments

Timothy Sykes

Hey Everyone,

As many of you already know I grew up in a middle class family and didn't have many luxuries. But through trading I was able to change my circumstances --not just for me -- but for my parents as well. I now want to help you and thousands of other people from all around the world achieve similar results!

Which is why I've launched my millionaire challenge. I’m extremely determined to create a millionaire trader out of one my students and hopefully it will be you.

So when you get a chance make sure you check it out.

PS: Don't forget to check out my free Penny Stock Guide, it will teach you everything you need to know about trading. :)

  1. Eric

    PDT should stand for Protection Daily Trepidation rule … It protects you from yourself …. Just. Hold overnight and there are no issues whatsoever .. Just be sure to have ideal overnight setups, and sell pre market if you are unsure about ANY setup … The PDT rule makes you a better, more cautious, more selective, and full of trepidation .. The fear to trade Is a benefical choice as SAFETY is so important.

  2. ROMANUS

    I am going to cut the BS about whining about the PDT Rule and the $25k minimum and I’ll start studying and getting on the right path ASAP no matter how much I have…

  3. Malion Waddell

    This is a lot of great information and knowledge being spread. I truly do appreciate what you are doing Tim. I’ve already applied to be one of your next students while watching your youtube videos. I recently had a red week, stepped back to do some research, and found you. I’m looking forward to the many videos I’m about to dive into! Thank you!

  4. Steve Toldi

    Many of your guys said it all for me .No need to repeat ,It is all here in the posts .The Hunger and the needs are the driving force .Wan to -Need to just like my exemples Like Tim and the rest .Thank You Guys to show us the way.

  5. PoisnFang

    Great info Tim!!! Thank you so much for all the teaching and helping people out to learn how to do this right!

  6. AnneMarita

    Very important information. And if someone wants to do more than 3 day trades a week, one can open another broker account.

  7. Mluleki

    That’s great Tim keep it up a good work , I can’t wait to be one of your top student even though I am in South Africa

  8. Patrick

    I’m only 15, so I have to juggle school + Stock Market Work, Therefore I have intensively scheduled my time so I still get down 25+ hours of Stock Market Study a week. I used to be addicted to video games… I worked myself out of it and now I’m addicted to self-improvement and working hard!

    The PDT rule is awesome! USE IT!

  9. Tao_penny_ (Dušan)

    It makes sense to me and I’m going to cut the BS about whining about the PDT Rule. 🙂

  10. Darren Henderson

    Hope I get to work with Tim and the rest of the team!! I’m ready to change the way I think to better myself and be able to help myself and my family.

  11. Martha Juarez

    Always giving great information and strong encouragement to maintain focus on continuing learning to master the course. I truly appreciate it all. Will stay strong .

  12. WereWrath

    It Definitely Makes Sense Big Companies Take Advantage Of People And Makes Them Think Trading Is Like A Machine Gun Trading Any Chance You Get, When Its Really Like A Sniper Gun Waiting For The Right Opportunities To Strike. Conserve Your Bullets So You Have Enough To Strike The Right Targets “Patience Is Key” Like Mr. Sykes Explains And Teaches Time And Time Again! Thank You For The Years Of Great Advice!.

  13. Scott

    Hi Tim it’s all starting to make so much sense to me know as for not being able to over trade and needing thousands to start.I have been wanting to start on stocks for a while now and am willing to put everything in to it as in effort and revision I have an eToro demo account as don’t have the money at moment to open real account so I need as much practice and help from an awsome knowledgeable bloke like urself kind regards Scott from the uk

  14. DNN

    Thank God for bringing us this far today.

    Growing up in Flatbush Brooklyn back in the 80’s and 1990’s, I didn’t have luxuries either. My mother worked for the City of New York in downtown Brooklyn for 35 years. She worked paycheck to paycheck. And on most occasions, she was snubbed from getting a raise. But she kept on working and successfully retired in 1994.

  15. Natalie

    This makes sense! Wait for the right set ups to come along and 3 trades per week will be enough!

  16. Greg Halliwill

    The PDT rule is great! It helps me be more thorough with my research and diligent when looking at the market so I don’t screw up.

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