Tuesday, August 25, 2020

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Pattern Day Trading-Warning (PDT)

 Pattern Day Trading. What is it and why should it concern me. PDT was a rule created for people with accounts under $25,000. It's a way for the government babysit your account and try to keep you safe.

Simply put, if you buy a stock and close it on the same day, this is called a day trade. If you buy a stock and keep it open until the next day..... no worries.

But if you open and close a trade on the same day, you are only allowed 2 more day trades within the next 5 days. So within the 5 day period if you open and close 3 trades, you will not be able to close any other trades that you open the same day.

The easy solution is to close any trade you open on the next day or later, so you don't have to keep track of it.

Let me know if you have questions.


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