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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 10131
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Day trading"....FINRA tells the rules, seemingly, all

Customer Question

Day trading"....FINRA tells the rules, seemingly, all jumbled up! The broker says, "it's complex"........??? Q...I have less than the $25K (req. to be able to sell "short")...once I have $25,000, IS (unlimited) day trading allowed (not only 3 every 5 days)? (Here's an aside...day 1, bought 400...day two, bought 100 twice, then sold the 400...two separate days, 400...NOT a day trade, but they made it so! "Complex"...I'd say so!)
Submitted: 9 months ago.
Category: Finance
Expert:  Jason M. Tyra, CPA replied 9 months ago.

Hi Dave:

I'm not sure I understand your question?

The minimum capital requirement is $25k for a pattern day trader. What constitutes a "pattern" of day trading is up to your broker.

Customer: replied 9 months ago.

The rules are, under $25K, no short selling and only 3 "round trips every 5 market days

Expert:  Jason M. Tyra, CPA replied 9 months ago.

Ok, what is your question?

Customer: replied 9 months ago.

What happened? Where's my reply?

Expert:  Jason M. Tyra, CPA replied 9 months ago.

That was my reply- I don't see a question here?

Customer: replied 9 months ago.

Exactly! I typed this, "Once I do have $25K in the account, can I trade more than 3 round trips every 5 days. This isn't that tough....

Expert:  Jason M. Tyra, CPA replied 9 months ago.

There isn't a FINRA rule against it. That is, you would meet the capital requirements for a pattern day trader, but your agreement with your broker would determine what you can do in your account.

Customer: replied 9 months ago.

Obviously. I have killer credit, am allowed margin, etc., etc.. They WILL agree, I JUST need to know the RULE. I KNOW $25K would qualify....DOES IT MEAN MORE THAN THREE DAY TRADES/ROUND TRIPS ARE THEN ALLOWED (EVERY THREE DAYS?) What are you smoking?! Never mind, I don't think you KNOW......no reply necessary....

Expert:  Jason M. Tyra, CPA replied 9 months ago.

I just answered your question: There isn't a FINRA rule against what you're trying to do.

Expert:  Lane replied 9 months ago.

Hi - Different expert ... let me see if I can help to clarify. What you don't seem to understand is the difference between FINRA rules and the restrictions ANY B/D can put on trading activities (based on the risk they're willing to accept) ... this is a contract issue not a regulatory issue.

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Said differently, the only FINRA reg here is the capital requirements for a pattern day trader.

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What your brokerage platform will let you do is a contract issue AND the contract (your account agreement with them) can be written such that they have discretion to make changes any time they like.

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You need to read your contract. (acoc**t agreement fine print).

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I hold a JD (Juris Doctorate, a doctoral degree in the law), with concentration in Tax Law, Estate law & Corporate law, an MBA, with specialization in finance & tax, as well as CFP® and CRPS designations. - I’ve been providing financial, Social Security & Medicare, estate, corporate & tax advice since 1986.