Is there a way around the pattern day trader rule?
Asked 4 years ago
Is there a workaround to the pattern day trading rules, or should I look for a broker that doesn't have these?
Andia Rispah Igobwa
Friday, December 10, 2021
Avoiding the PDT rule by using a cash account is, in all probability, the simplest technique. The only disadvantage of a cash account is that you can only deposit money that has already been paid.
This implies that if you buy or sell a stock in a cash account, the funds must remain available two days after the trade date before you can utilize them again.
For example, if you sold stock on Monday, the money wouldn't arrive until Thursday... Monday is the trade date, followed by Tuesday and Wednesday to settle the funds. Thursday has the money available because it's when settlement takes place.
However, if you have a larger account, you may day trade as much as you wish until all of the money is gone. For example, if you use $5,000 to day trade a stock and have a $20,000 account, you still have $15,000 to play with.
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