MOST BEGINNERS DON'T HAVE $25K IN THEIR ACCOUNTS. THEIR ACCOUNTS WOULD BE FROZEN FOR 3 MONTHS IF THEY ATTEMPTED 0DTE TRADING AND THEY ARE MEANT TO BE TRADED!!!!!!!!
0DTE TRADES ARE EXTREMELY SHORT TERM. ITS EASY TO RACK UP 5 ROUND ROBIN TRADES IN JUST A FEW HOURS WHICH WOULD BREAK THE PATTERN DAY TRADING RULE FOR SMALL ACCOUNTS!!!!!
The Pattern Day Trader (PDT) rule is a regulation that applies to traders who execute four or more day trades within a five-business-day period using a margin account. Here are the key points:
Definition: A pattern day trader is someone who executes four or more day trades within five business days using the same account. These day trades must constitute more than 6% of the margin account’s total trade activity during that window.
Account Flagging: If a trader meets the PDT criteria, their account is flagged as a PDT by their broker. This designation places certain restrictions on further trading.
Minimum Account Balance: Pattern day traders are required to hold at least $25,000 in their margin accounts. If the account balance drops below this threshold, they will be prohibited from making further day trades until the balance is brought back up.
Trading Types: PDTs can trade different types of securities, including stock options and short sales, as long as they occur on the same day.
Day-Trading Buying Power: PDTs can trade amounts up to their day-trading buying power, which is generally equal to four times the equity they hold in excess of their maintenance margin.
Margin Call: If there’s a margin call, the PDT has five business days to address it. Failing to do so results in a 90-day cash-restricted account status.
Exemptions: Long and short positions held overnight (but sold prior to new purchases of the same security the next day) are exempt from the PDT designation.
Remember that the PDT rule is regulated by the Financial Industry Regulatory Authority (FINRA), and it aims to discourage excessive trading and protect investors from risk-taking.
Bearish
