1. Does having a margin account also remove the 3 day settlement restriction for OTC/Pink trades? I know that most brokers consider penny stocks to be non-marginable. However, if I restrict myself to trading within my account balance, will the margin account cover my settlement period and allow me to both buy and sell another OTC stock before the 3 day settlement is over?
There will be NO 3 day restriction if you have a margin account. Doesn't matter if they are otc's or big boards. If you are using your own money and not borrowing you shouldn't have any problem.
2. With a margin account with less than 25k, are only trades that are both bought and sold in the same day counted towards the 3 day-trade limit? For example, lets say I do this:
Monday: Purchase stock A
Tuesday: Purchase stock B, C, and D and sell them all the same day.
Wednesday: Purchase stock D
Thursday: Sell stock D
Friday: Sell stock A
The pattern day trading rule would apply if you purchased the same equity and sold it on the same day. Your example would constitute 3 day trades because on Tuesday you purchased B, C, and D and sold them the same day. They are three different equities so you would have been charged with three daytrades for Tuesday. Doesn't matter if you did all of them in one day. Matters how many you do.
3. If you have a margin account above 25k and get the "Pattern day trader" status, are there no more restrictions? Or does that have its own set of rules?
As long as you stay above 25k you will be fine. No, there are no other restrictions. If you fall below 25k you could get an Equity Maintenance call and they will suspend your account.
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