Day Trading is defined as buying and selling the same security within the same trading day. Therefore, if you buy 100 shares of AAPL at 9:00 a.m. M. Y sells 100 shares of AAPL at 2:00 p.m. M., You just ran a daily trade. Once you have executed trades of at least four days within five consecutive business days, your brokerage firm will label your account as “PDT” or Pattern Day Trader.
Being labeled PDT is not necessarily a problem unless you have less than $ 30,000 in your account, depending on the company minimum. The legal minimum set by the SEC is $ 25,000, but it is at the broker’s discretion to increase that amount. If you are considering becoming a day trader, contact your brokerage firm to determine minimum account balance restrictions.
If you are labeled Pattern Day Trader and you do not have the minimum in your account on the day you have executed your fourth day trade, your broker will send you an Equity Call asking you to make a deposit to increase your account to the minimum set. If you do not have the funds and it is the first time you have been tagged as PDT, simply send your brokerage firm an email or letter stating that you do not have the funds to deposit into your account and that you intend to reduce or suspend your day-to-day trading activities in the future. Then, request that your PDT designation be removed along with any holds that may have been placed on your account. Most companies will respond positively to this request as they have a unique exemption policy.
You may even want to call a service representative to confirm the removal process for your PDT status, as all brokerage firm procedures are different. If you can, try sending an email and not a paper letter to get you up and running asap.
This would be a good example of a request to remove your PDT status:
“Thank you for the notification of my pattern day trader status. I understand the restrictions involved in being a PDT and since I do not have the capital to maintain my capital at or above $ 30,000, I would like to state that I will reduce my trading activities. intraday trading significantly in the future and would like to have my coding removed as a Pattern Day Trader. Also, if locks or holds have been placed on my account, please remove them so that I can resume trading. You need to take further action. “
If this is the second time you have been considered a PDT and you do not have the required minimum balance, you will be sent another Capital Call. If you are unable to increase your account balance, your margin will be restricted and you will only be able to trade long term on your account. You will not be able to short sell any security as shorting requires an active margin. You may also have a hold on your account that needs to be removed. Call your broker to discuss your options.
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