Pattern day trader question

[am_wood]

If I put in a sell order immediately after making a buy, does it count as a day trade if the sell does not go thru?

[DogDayTrader]

If I put in a sell order immediately after making a buy, does it count as a day trade if the sell does not go thru?

To the best of my knowledge, no.

[TheStockDude]

Technically no i guess. Day Trader is just a term really.

Investopedia's definition: A stock trader who holds positions for a very short time (from minutes to hours) and makes numerous trades each day. Most trades are entered and closed out within the same day.

[am_wood]

Thanks. Figured I better check. I'm obviously a newb & don't want to get in kahoots with the SEC. I'm still quite a ways away from building my portfolio up to the 25k theshold that will permit me to day-trade.

[sanvister]

I certainly agree with TheStockDude. Your advice is really very helpful for us.

Technically no i guess. Day Trader is just a term really.

Investopedia's definition: A stock trader who holds positions for a very short time (from minutes to hours) and makes numerous trades each day. Most trades are entered and closed out within the same day.

Thanks a lot!

[tradingmeansfreedom]

If I put in a sell order immediately after making a buy, does it count as a day trade if the sell does not go thru?

Fidelity uses the term to describe a commission level.

From Fidelity:

"Pattern Day Trader

The term pattern day trader generally means any customer who:

* Executes four or more day trades within a five-business-day period, or
* Incurs two unmet day trade calls within a 90-day period

A non-pattern day trader account, or an account with only occasional day trading, becomes designated a pattern day trader if it meets either of the above criteria."

Fidelity

[LRP]

Pattern Day Trading isn't just a vague term to represent a highly active trader.

There are additional SEC rules which pertain to your account if you meet the criteria: Pattern day trader - Wikipedia, the free encyclopedia

I have a few accounts and on one, I received notice from my broker (optionshouse) that I have made 4 day trades (open/close position same day) in 5 trading days. It doesn't have to be the same stock or option each time -- any 4 round-trips in the same day.

As a result, I was thereafter required to maintain a $25,000 balance in that account.

The requirement can be removed after 90 days upon your request or you can forgo margin and trade without having 25K.

[nypete]

Learn about FINRA Rule 2520 and NYSE Rule 431
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Day trading is the practice of opening and closing an equity or option position (i.e., buying and selling the same stock or option) on the same trading day. A same-day buy and sell, or a same-day sell short and buy to cover, is considered a day trade.

If you make four or more day trades in a rolling five-trading-day period, you will be considered a pattern day trader under these rules. However, if the day trading activity does not exceed six percent of your total trading activity for the five-day period in question, your account may not be designated a pattern day trading account.

If you meet the definition of a pattern day trader, you'll be required to maintain $25,000 equity in your brokerage account at all times. If your account equity falls below $25,000, a day trading minimum equity call will be issued on your account requiring you to deposit additional funds or securities.

In order to meet the $25,000 requirement, your pattern day trade account will earn credit interest on the free credit balance.

As a pattern day trader, you'll be granted day trading purchasing power up to four times your NYSE margin excess.

Pattern day trading status only applies to customers with margin accounts. The day trading rules apply only to the buying and selling of the same stocks or options on the same trading day. They do not pertain to mutual fund or bond trades and are not applicable to positions held overnight or longer.

Note:
Per NYSE Rule 431, stock transactions in cash and retirement accounts are subject to T+3 settlement. In other words, if you sell shares of stock held in your account, you may not use the proceeds to purchase another security until three market days after the trade (the settlement date of the sale). Options trades are subject to T+1 settlement.
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Know if I'm a pattern day trader
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You will be considered a pattern day trader under FINRA and NYSE rules if you buy and sell the same stock or option on the same trading day four or more times within a period of five trading days, and this activity makes up more than six percent of your trading activity.

If you meet the definition of a pattern day trader under the guidelines above, you'll see two additional fields called Day Trading Cash purchasing power and Day Trading purchasing power when you view the Balances page.

Day Trading Cash purchasing power: the cash available for you to purchase and sell non-marginable stocks or options intraday

Day Trading purchasing power: the cash available for you to purchase and sell marginable stocks intraday

Note:
If you purchase securities and plan to hold them overnight, be sure to use Regulation T purchasing power figures and not Day Trading purchasing power.
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Know the minimum equity requirements for pattern day trading
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Regulations call for a $25,000 minimum equity requirement for pattern day traders. This is designed to address the additional risks inherent in leveraged day trading activities, and to ensure you're able to cover any losses incurred in your account from the previous day before you place new day trades.

If your equity falls below $25,000, a day trading minimum equity call will be issued on your brokerage account requiring you to deposit additional cash or securities. Account equity is calculated based on the closing prices of securities on the previous market day.

Important:
If you execute a day trade (buy and sell the same stock or option on the same trading day) before a day trading minimum equity call is met, your account will be immediately restricted to cash-only transactions for a period of 90 days or until the call is met in accordance with NYSE Rule 431
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This info. came from the Etrade site and most likely applies to other firms. Each firm should post similar information.