Question by michael_in1978: Question about “day-trading” with less than the required 25K in your account.?
Does selling a stock that you’ve owned for awhile (weeks or months or whatever) then buying it back that day at a lower price, count aginst your 3 ‘day trades’ in a 5 day period? If so…well…then that blows….
Best answer:
Answer by Matt K
yeap – that’s referred to as “trading” in a cash account. I do it all the time and am subject to the hold rule.
What do you think? Answer below!
Tags: About, account, Daytrading, Less, Question, required, than
A pattern day trader is defined in Exchange Rule 431 (Margin Requirement) as:
1. any customer who executes 4 or more round-trip day trades within any 5 successive business days.
2. number of day-trades is more than 6% of the total trades in the account during that period
if you have a cash account you you have to wait for your money to “settle” back into your account, then you can buy agian. If you have a margin account you dont have to wait for it to settle. Therefore you can buy it again. And no it wont count towards one of your 3 daytrades in a rolling 5 business day period. A daytrade means buy+sell in the same day. So in your case you bought it days-weeks ago.
The situation you describe is not “day trading.”
According to the NYSE definition of “day trading” the sale of an existing position from the previous day is a liquidation. The repurchase of that position is the establishment of a new position. It is not subject to day trading margin requirements.
If you are using a cash account, settlement rules would still apply.