Saturday, November 22, 2008

Day Trading

Although I've made many, many short-term trades, for the first time in over thirteen years, my brokerage has officially classified me as a "day trader." The exact definition is below:

The FINRA currently defines day trading as purchasing and selling, or short selling and purchasing to cover, the same security on the same day. A pattern day trader is defined as someone who makes four or more round-trip day trades in a five-business-day period, unless this activity is less than 6% of total trading activity in that period.

What happens now? The only differences appear to be 1) I have to maintain 25K in equity ("Pattern day trading accounts are required to maintain minimum equity of $25,000 on any day in which day trading occurs."); and 2) my margin buying power increases.

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