What Does The Pattern Day Trader Rule Mean?

Coffee With Markus | Episode 114

Intro: 0:00
What's Going On In The Markets: 1:58
Live Trades: 6:45
Pattern Day Trader Rule: 14:57
Deep Dive Q&A: 23:28
Q: How do you keep track of your margin used in Tastyworks? Manually w/ Wheel calculator? 23:52
Q: Are there any tax implications to being flagged as a pattern day trader? 30:58
Q: After 5 days, does a day trade reset? 33:39
Q: When trading The Wheel, if you get assigned & are on margin, is it better to close the position & pay margin interest? 35:40

Taking a look at the markets today The DJI is down 0.6% today, The SPX down 0.5%, with the NDX slightly up. What's causing the markets to teeter like this?

this is because the news is teetering back and forth as well. Last week Pfizer announce that they have a vaccine and today they released everything, and apparently, it is 95% effective which is good news, however in the U.S. over 150,000 new cases of the virus was reported today, totaling one million for the week, with schools in NYC closing down.

People are also waiting on a stimulus deal, but there has been no solid news on that yet, just back and forth between proposals.

AMZN is now going into the pharmacy business, making it possible to order prescriptions from them causing CVS & Walgreens to plummet.

There was news yesterday that TSLA will be included in the SPX on Dec. 21st they are up 11%.

As a whole, the markets aren't really going anywhere as there is still a lot of uncertainty after making record highs on Monday.

Positions I'm currently trading w/ the PowerX Strategy

1) AAPL: Got entry signal last Monday, & has not been going anywhere, but we still see green bars meaning it's likely to go up.
2) AM: entered trade 2 days ago. My goal is for it to hit $8.06, but so far it has been all over the place.
3) ESPR: Entered today, & down $66

Positions trading with The Wheel Strategy
1) GDX: Sold 35.5 put. Down almost 3% but still in the green. EXP in 2 days.
2) LOW: Entered today, sold 148 put. EXP in 2 days.
3) ATVI: Entered today, sold 73 put. EXP in 2 days.

The Pattern Day Trader Rule:
A PDT is someone who executes 4 or more day trades in 5 trading days. Only applies to stocks and options.

What is a day trade?
A trade that you open & close during a trading day. You need a margin account to day trade.

How Can you trigger this rule accidentally?
A trade that hits the stop loss/profit target the same day its opened, would count as a strike

What happens if you trigger this rule?
If you have more than 25K cash in your account...NOTHING. If you don't you will be restricted to trade on a CASH basis for 90 days.

How can you avoid this?
Have 25K cash in your account, and/or count the number of day trades you make. Trade without a margin account.

Links and videos in this episode:
Wheel Playlist:
https://www.youtube.com/playlist?list=PLBa3sAx-Io2mybLLdWtbjTFqK9-BR5SJb
Trading Taxes Explained: https://www.youtube.com/watch?v=laMtU3KFzSI
Cash Covered vs Naked Puts: https://www.youtube.com/watch?v=aUVw9HYrFFE
PowerX Strategy on Kindle: https://www.amazon.com/PowerX-Strategy-Stocks-Options-Minutes-ebook/dp/B0879CQHBF/ref=sr_1_2?dchild=1&keywords=powerx+strategy&qid=1605733874&sr=8-2
How to manage a trade that's in trouble: https://www.youtube.com/watch?v=G6tPKaz03Qo

#PatternDayTraderRule #PatternDayTrader #DayTradingRuleExplained
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Видео What Does The Pattern Day Trader Rule Mean? канала Markus Heitkoetter