Pattern Day Trading rules

[Mark D. 435]

Hi All, 

i'm working on growing my real account to $25k so that i can trade without worrying about the PDT rule. I spent some time reading on FINRA's website about what constitutes a trade and it says:

"Day trading refers to buying then selling or selling short then buying the same security on the same day. Just purchasing a security, without selling it later that same day, would not be considered a day trade."

so my question is say i buy 500 shares and then sell in 100 increments, is that one trade once i'm flat or is that four trades? five trades? i'm afraid i'm going to get stuck short or long if IB cuts me off for PDT. Seeing if anyone has experience with this or what happens when you go over the limit. 

 

thank you! 

[Carlos M. 230]

Mark, this is a great question and one that I did some research on when I first starting getting into trading with TOS. 

So if you buy 500 shares long, once you sell 100 shares that is recorded as 1 day trade. If you sell the rest in any faction whether is 1 trade to sell 400 shares or 4 trades, They are consider part of the 1 day trade. 

If you buy 500 shares of the stock and then a second order you buy another 500 shares to make it 1,000 shares, when you sell the first 500 shares in any faction (let's say 3 trades) that's consider 1 day trade. If you sell 600 shares in one shot then that's consider 2 day trades. 500 will cover the first order and the 100 shares will cover part of the second order. 

Hope this helps. There is a good article I read on this but I couldn't find it. If I do I will post it here.

Edited July 14, 2018 by Carlos M.

[Mark D. 435]

Great Carlos, thank you!