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Wall St pattern day trading
wall stIf you are flagged as a Pattern Day Trader (PDT) there are ongoing trading trading restrictions that we must apply.
When will I be flagged as a Pattern Day Trader (PDT)?
The U.S. regulator FINRA introduced the PDT rule to protect investors and reduce risk when trading. The rule encourages traders to operate with sufficient capital. The most common way to be flagged as a Pattern Day Trader is by executing four or more day trades within five consecutive trading days.
Another trigger is exceeding your Day Trade Buying Power (DTBP) twice and failing to meet the resulting Day Trade Calls. If these calls aren’t cleared, your account may be flagged as a PDT.
You can also be flagged as PDT if there is a reasonable basis to believe that you’ll engage in pattern day trading.
PDT trading restrictions
Once you are flagged as a PDT there are ongoing trading trading restrictions that are based on your circumstances.
Wall St account equity is below US$25,000
You cannot complete any Day Trades: your Day Trade Buying Power (DTBP) will be set to $0. This prevents you from executing any further day trades (a buy and sell of the same security on the same day) in your account.
This restriction lasts for 90 calendar days, or until you deposit funds to meet the US$25,000 minimum equity requirement. If you deposit funds to meet the minimum equity requirement, you will be able to complete day trades in the next market session after the funds settle.
You are still allowed to place non-day trades (e.g., buying and holding a stock overnight, or selling a stock you already own and holding the cash overnight).
Account equity is at or above US$25,000
If your total account equity is US$25,000 or more at the close of the previous trading day, you can continue to execute day trades within your Day Trade Buying Power.
Failing to meet Day Trade Calls
If you exceed your Day Trade Buying Power (DTBP) twice and fail to meet the resulting Day Trade Calls you will not be able to complete any Day Trades for 90 days.
What is considered Wall St account equity for the US$25,000?
Your account equity includes:
Settled cash
Unsettled sale proceeds
The value of held securities.
Can the PDT flag be removed?
The PDT flag is behaviour-based will not be removed. This means you will always be subject to certain trading restrictions that are based on your Wall St market equity.
Important:
Stake, trading as Stakeshop Pty Ltd, is not obligated to provide advance notice or guidance regarding day trading activity. Customers who engage in day trading are responsible for understanding and complying with all applicable regulations and tax obligations.
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