CASH COW

[mick]

******F / $25K Day Trader Rule - Explained
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$25K Day Trader Rule - Explained
I was asked about this the other day and thought there may be some in here with the same question...
If you do more than 3 round trips (Buy & Sell the same stock within the same day) within a 5 day period,
you will be marked as "A Pattern Day Trader"
You will retain this stautus for 90 days, unless you bring your account balance to or above $25K.

This does NOT mean that your trading account will be Frozen for 90 days
This does NOT mean that you are in trouble with the SEC or FINRA
It DOES mean that you will not have the privalages of a Margin Account for 90 days
Which in turn means that you will not be able to use funds from a closed trade, until such funds clear.
A margin account requires a $2K minimum balance and allows you to trade with funds that have not yet cleared.
It takes 3 days for trade funds to clear.
While you are in "Pattern Day Trader" status your trading account will be a "Cash Account"

To achieve the $25K balance which will allow you margin and more than 3 round trips in a 5 day period you can deposit money in a separate account than the one you trade with.

You can even transfer your IRA account to your broker account to make
up the difference and give yourself a higher margin allowance.

Feel free to ask me any questions about this or anything else pertaining to trading.
I hope this helps