Day Trading
Q. What is the definition of a "Pattern Day Trader"?
A. FINRA defines a Pattern Day Trader as "any customer who executes four or more day trades within five business days, provided the number of day trades is more than 6% of the total trades in the account during that period". Scottrade defines a pattern day trader as any customer who executes four or more day trades within five business days.
Q. What is a Day Trade?
A. A day trade is the purchasing and selling or the selling short and purchasing to cover of the same security on the same day (including pre- and post-market) in a margin account except for:
a. A long security position held overnight and sold the next day prior to any new purchase of the same security, or
b. A short security position held overnight and purchased the next day prior to any new sale of the same security.
Q. Will Pattern Day Traders be required to have a margin account?
A. Yes, all Pattern Day Traders must have a margin account and will be required to maintain $25,000 equity in order to continue Pattern Day Trading.
Q. What are the consequences if I have a margin account and I day trade four times in five rolling business days?
A. Your account will be designated as a Pattern Day Trading account, and you will be required to maintain $25,000 equity at all times in order to continue day trading.
Q. What are the consequences if I am a Pattern Day Trader and execute a day trade with under $25,000 equity?
A. When you execute a day trade with under $25,000 equity, your account will lose margin privileges and you will be restricted to closing transactions only until one or more of the following occurs:
-
All margin debits are satisfied.
-
Your equity is brought up/increases to $25,000.
-
90 days pass without any day trade transactions.
-
If all margin debts are satisfied, you may resume trading in a cash account.
Q. Do the day trading rules apply to options?
A. Yes, they apply to all equities and options.
Q. Once an account is coded as a "Pattern Day Trader", can the account be re-coded as a non-day trading account?
A. No, not for a period of 90 days. If 90 days pass without any day trade transactions, your Pattern Day Trading designation will be removed and the surveillance process will start over. As an alternative, you may pay off the margin debit balance, close any short positions and trade in the cash account.
Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Scottrade's margin agreement, available at scottrade.com or through a Scottrade branch office, contains the Margin Disclosure Statement and information on our lending policies, interest charges and the risks associated with margin accounts.
| Trading Web Site | 7/10/10 |
| ScottradeELITE | 7/10/10 |
| Trading Web Site | 7/31/10 |
With more than 400 branch offices nationwide, Scottrade offers live events in neighborhoods all over the country. Visit your local Scottrade office for a cozy small-group Branch Seminar, or get together with Scottrade customers from your area at our popular User Summits.
Browse All Live Events >Stream live, interactive presentations right to your computer! Check back every week for new Live Webinars on a variety of topics including:
- Market analysis
- Basic & advanced orders
- Research tools
Education meets interaction in the Scottrade Community. Join Scottrade customers from all over the country as you exchange information, ideas and trading strategies in a comfortable online learning environment.
Interact with Scottrade customers and product specialists. Share your thoughts and learn from others. Grow as an investor. Join our community today!
Learn More About the Community >Brokerage Products and Services offered by Scottrade, Inc. - Member FINRA and SIPC
Online market and limit stock trades are just $7 for stocks priced $1 and above.
Any specific securities, or types of securities, used as examples are for demonstration purposes only. No information on this Web site should be considered a recommendation or None of the information provided should be considered a recommendation or solicitation to invest in, or liquidate, a particular security or type of security.
Investors should consider the investment objectives, risks, and charges and expenses of a mutual fund carefully before investing. A mutual fund's prospectus contains this and other information about the mutual fund. Prospectuses are available through our trading site or through a Scottrade branch office. The prospectus should be read carefully before investing. No transaction fee (NTF) funds are subject to the terms and conditions of the NTF funds program. Scottrade is compensated by the funds participating in the NTF program through recordkeeping, shareholder, or SEC 12b-1 fees.
Investors should consider the investment objectives, charges, expense, and unique risk profile of an Exchange Traded Fund (ETF) carefully before investing. Leveraged and Inverse ETFs may not be suitable for long-term investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies. A prospectus contains this and other information about the ETF and should be obtained from the issuer. The prospectus should be read carefully before investing.
Margin trading involves interest charges and risks, including the potential to lose more than deposited, or the need to deposit additional collateral in a falling market. Margin Disclosure Statement (PDF) is available for download, or it is available at one of our branch offices. It contains information on our lending policies, interest charges, and the risks associated with margin accounts.
Options involve risk and are not suitable for all investors. Detailed information on our policies and the risks associated with options can be found in the Scottrade Options Application and Agreement, Brokerage Account Agreement, and by downloading the Characteristics and Risks of Standardized Options and Supplements (PDF) from The Options Clearing Corporation, or by requesting a copy from your local branch office. Supporting documentation for any claims will be supplied upon request.
Market volatility, volume, and system availability may impact account access and trade execution.
Testimonials may not be representative of the experience of other clients and are no guarantee of future performance or success.