Do you have to purchase stocks on margin to be considered a Pattern Day Trader by the NYSE?
January 1st, 2010
I’m a small investor, a very small investor. I have devised a range trading strategy which only requires two trades per day. My initial investment will be 0, through a cut rate online brokerage. I understand that the NYSE and the NASD, require a minimum of 000 in the accounts of "pattern day traders". However the reason as I understand it, is to protect banks from losses on margin loans. I don’t intend to buy on margin. So does this regulation apply to me? Thanks.
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Posted in Stock Market Basics | 
Tags: Banks, brokerage, day traders, initial investment, Investor, Losses, margin loans, nasd, nyse, pattern day trader, small investor, stocks, trades, Trading Strategy
A day trader is some who buys or sells the same stock, the same day & does that 3x in the same trading week. For example, you buy stock (x) on monday, sell stock (x) on monday, buy stock (x) on tues, sell stock (x) on tues, then buy and sell stock (x) on wed, boom your flagged as a day trader & are requared to have 25k in your accout. so b4 you do the 3rd bu or sell, wait 5 market day’s and you will be ok if you have a margin account (most margin accouts require a $2,500 balance), if you have a cash account, then after u sell a stock u are suposto wait 3 marktet day’s b4 you buy a diff sotck, but there is a loop hole, you can buy a stock sonner, but then you cannot sell it b4 the 3 day’s are done or your flagged for using a margin account but only having a cash accout/ the best way to do trading w/o having 25k, is to get a margin accout w only 2,500, doing 2 day tades a week & your safe..
If you make more then 3 day trades in a 5 day period you’ll get flagged as PDT. You must have a margin account regardless of whether or not you use it, and you must have the 25k to have a margin account.
What I’d suggest is to use two different brokers so you can alternate days although you may not have funds to start two accounts … that is your best alternative IMO.