What is The Pattern Day Trader (PDT) Rule in Stock Market Trading?
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0:05 Tim Sykes, millionaire mentor and trader here explaining what is such a touchy topic, the Pattern Day Trader rule, otherwise known as the PDT rule.
0:15 If you have a US account, and you have under $25,000, you can only make three-day trades per week, per five rolling day period. A day trade is in and out of a stock the same day. You can have unlimited trades overnight. You can hold the stock long or short, overnight, every single night, like it buy it one day, sell it the next. There are no limits on that.
0:40 This is just a rule designed by the SEC to protect newbies and beginners and people with small accounts, frankly, from themselves. I used to dislike the PDT rule. I was like, screw this! I want to be able to trade as much as I can.
1:05 I respect the PDT rule because I think it’s essential for newbies to trade less. This is why brokers don’t necessarily love me, but it’s the truth. This is how I create millionaires from scratch, by teaching you patience.
1:20 You do not need to make more than three-day trades per week. Again, you can hold the stock overnight, so you can make three-day trades per week and then also hold the stock overnight. So you make four trades or five trades or seven trades a week.
2:20 I think too many newbies get too excited to trade a lot, and they want to learn. They want to tinker and trade. I would encourage you to use stockstotrade.com software.
2:30 They have paper money where you’re not risking any money, and you’re trading like a fantasy account. That way, you can test with no risk. You don’t have to breach any PDT rule. You don’t have to over-trade yourself into oblivion and have a lot of commissions or, again, if you use a commission-free broker, trade yourself into frustration because you’re just over-trading.
3:30 A lot of you guys have to pay attention and listen to the things that I had to learn the hard way. I never had a teacher. So I wish I had someone telling me this stuff when I was first beginning. The PDT rule is not something to be scared of. It’s not something to be upset about. It’s not something to be avoided. I know there are brokers out there, they’re like, “Oh, escape the PDT rule.” I wouldn’t use any of them.
4:00 I think the PDT rule is reasonable. It keeps you in check. And it forces you, primarily to get above $25,000. You know, I go back to $12,000 every year in one of my Etrade accounts to try to grow it. And usually every year I double it or triple it or quadruple it, in front of my students, to show how you can do it. And it forces you to be much more meticulous. It forces you to trade like a pro.
4:20 I highly encourage you to start to love the PDT rule. Do not try to avoid it. Do not use leverage. Do not try to put in more than $25,000 in your account at first. I would encourage you to start small.
4:45 The lessons that you learn growing your account when it’s small, I know it’s not a lot of money, but you’re not going to make a lot of money in your first few weeks or months anyway. So get that out of your head. It’s much more important to develop a proper trading process and be disciplined in the beginning.
5:00 I think the PDT rule is reasonable. Don’t get upset about it. This has been another video of Tim’s Tips.
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* Results may not be typical and may vary from person to person. Making money trading stocks takes time, dedication, and hard work. There are inherent risks involved with investing in the stock market, including the loss of your investment. Past performance in the market is not indicative of future results. Any investment is at your own risk. See Terms of Service here: https://www.timothysykes.com/terms-of-service/
What Is A Stock Day Trader, What is The Pattern Day Trader (PDT) Rule in Stock Market Trading?.
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This analysis technique depends on determining various levels on the graph. This implies, to name a few things, just investing what you can afford to lose. Never have a big stop loss unless you are doing swing trading.
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Look for divergences, it tells you that the price is going to reverse. , if rate makes a new high and at the same time that the stochastic makes lower high.. This is called a “bearish divergence”. The “bullish divergence” is when the rate makes a new low while the stochastic makes higher low.
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