If I traded stock in this manner , am I day trader………
Mon : Buy 3
Tue : Sell 3
Wed: Buy 3
Thu: Sell 3
Fri : Buy 3 , Sell 3
My goal is to NOT be under day trade rules , but be as active as possible .
Thanks
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3 Comments
While your example does not meet the definition of “pattern day trader” you may run into a “free ride” problem depending upon how much settled cash or margin you have when the trades were made.
For example if it was a cash account and you spent it all on the 3 buys Mon and used the proceeds of Tue sale to buy on Wed, you may not be able to sell the Wed buy until the following Monday unless you had enough already settled cash to cover the Wed buy. That might put a damper on your Fri day trade depending upon how much settled cash you had then beyond the Wed buy.
Although, if you had enough cash going into the week for both Mon and Wed buys, you may be able to use the proceeds from Tue sale for Fri trades.
So if you want to make a quick trade in less than 3 days, you have to make sure that you have the margin or settled cash to cover that buy before you would want to sell. So besides the amount available to purchase securities (which might not be settled yet), you have to be aware of what is actually settled when, or day trade buying power.
No you would not be considered a day trader.
A day trader is exactly what it says, you buy today, you sell today. The are some situations that a day trader will hold a position to the next day, but not very often. Most day traders want to be flat at the closing..
If you are properly capitalized, an in compliance with all the rules and regulations at all times you can trade as much as want and as oftern as you want.
If you are not properly capitalized, nor know the rules & regs, you should not be trading.
to RYAN M – not all day traders are on the floor, most of them trade at home or in board rooms
Some of my floor guys did only 3 trades a day, all big blocks, there’s nothing wrong with that, especially when the sell is greater than the buy
I used to work for a day trading firm, and you would not even be allowed on our floor with only 3 transactions per day! Our definition of a day trader was someone who bought and sold all of their positions in a single day and went home with owning no stocks.