Day trade question?

Question

I have a account with Scottrade. I read that if I make more than 4 trades in 5 business days, my account would get turned into a day trade account. Is this true? if it is, isn't it a stupid rule?

Answer 1

1) Yes.
2) No.

VERY IMPORTANT NOTE:
You need at least $25,000.00 by law to daytrade.

If you don't have $25,000.00 in your Scottrade account I STRONGLY SUGGEST YOU NOT TO BREAK ANY SEC LAWS.

You are a little confued about this rule.

You can make 1000 trades in a day if you want and if you have enough money.

However, DAYTRADES ARE A DIFERENT KIND OF ANIMAL.

A Daytrade means you buy Acme on Monday and you sell Acme on the SAME DAY.

If you buy Acme on Monday and you sell until Tuesday (Or the next decade) you are no making any DAYTRADES.

Answer 2

Actually the rule is with what is called pattern day trading AND there is a minimum account size of $25k to be allowed to be a pattern day trader. So what scottrade is telling you is that you are only allowed to make 4 trades in 5 business days because of the pattern day trading rules. This is not scottrade only - this is a sec rule.

Do a search for - pattern day trading - to get more information.

Answer 3

Actually the government views that if you trade five or more times on a constent basis you can be labeled a day trader and then get taxed as if that is your income. It is to protect those who trade on long term investing from those that do quick in-and-out.

Answer 4

the account is tracked because they have a responsibility to report all activity to the IRS. However, a trade needs to hold for 3 days before the money is released. It has to clear. So if you have a stock AKN (Akorn Pharmaceuticals) you could swing trade it, or hold out for when one of their ANDA's is FDA. You'll see what I mean. Good Luck

Answer 5

Don't ask us - ask Scottrade.