In the United States, Is it possible to buy and sell the same stock on the same day? I heard day traders can do this, and you need to have at minimum of 25K in the account in order to be a day trader.
If I have 25K in my account, do I automatically become a day trader and be able to buy and sell the same stock on the same day? Or I have to apply for it? Do all stock brokers allow you to do day trades?
I guess my question is are are the steps for becoming a day trader, so I can buy and sell stocks on the day? I understand there are risks. I am looking for how to do it, because every time I buy a stock I have to wait at least 3 days before I can sell it.
Because it takes 3 business days for the actual transfer of stock to occur after you buy or sell to the next owner, your cash is tied up until that happens.
This is called the settlement period. Therefore, brokers offer "margin", which is a form of credit, or loan, to allow you to keep trading while the settlement period occurs, and in other situations unrelated to the presented question. To do this you need a "margin account", you currently have a "cash account". The way around THAT is to have multiple margin accounts at different brokerages. This will greatly increase the number of same day trades you can make.
Many brokers that offer a "solution" to PDT to people that don't have 25k to invest, are offering professional trading accounts, which have additional fees for data, which is free for retail trading accounts. So be careful of the advice you get on the internet. It is mostly white noise. Feel free to verify. You should not have to wait 3 days to sell the stock after purchase. If you are trading with a cash account you will have to wait for the sale to settle 3 business days before you can use those funds to purchase other stock.
If you're going to be a day trader, you really need to know your stuff. It's risky, to say the least. One of the most important elements to being successful is having access to very fast data streams so that you can make moves quickly as trends stat to develop in the markets. If you're planning on doing this using consumer-grade sites like eTrade, that's not a good idea. The web systems of many of the retail brokerage firms are not good enough to give you data fast enough for you to make good, timely decisions or to be able to execute trades way that day traders do in order to make their money.
Many of those guys are living on very thin margins, sometimes just a few cents of movement one way or the other, so they make up for it with a large volume of trades.
One of the reasons you were told you need a big chunk of money to day trade is that some firms will rent you out a "desk" and computer access to day trade through their systems if you're really serious about it.
If you've never done day trading before, be careful. It doesn't take much to get caught looking the wrong way on a trade that you can't get out of without losing your shirt unless you're willing to hold on to the stock, which could be longer than a day.
Day trading sounds very simple and easy, but it isn't. You need to learn about how it works a good book to read to understand this market is "Flash Boys" by Michael Lewis, besides being very entertaining , because it is a space filled with very sophisticated, well-funded firms and individuals who spend huge sums of money to gain miniscule advantages in the markets.
Questions Tags Users Badges Unanswered. Join them; it only takes a minute: Here's how it works: Anybody can ask a question Anybody can answer The best answers are voted up and rise to the top. How can I buy and sell the same stock on the same day? This does not necessarily make you a day trader. As Chris asked, what country are you in? As different countries may have different rules on what defines a day trader.
In Australia, being a day trader only matters in regards to how your profits and losses are taxed. What's with the downvote? Seems like a legitimate question. Note that this will be subject not only to short-term tax rates but to the "wash rule". And I agree with DanielAnderson that this is a good way to lose your shirt unless you are willing to spend top-level amounts of time and effort on it.
Long-term investment is a positive-sum game. Day trading isn't, and has you playing in direct competition with the pros I've updated the question, my question applies to the United States. This problem has nothing to do with: I'm not trying to prevent the OP from running into wash or short-term tax rates.
If you think you can beat the odds by enough to overcome those drags, go for it; just remember the difference between paper gains and real money, and don't put yourself in a position where you can lose more than you can afford to lose. I think a warning that one is entering the higher-risk area is appropriate. Of course return and risk are coupled, so for some it may be a game worth playing, but go in with eyes open.
Also I can buy a stock today and sell it today without being classed as a day trader. Victor you can buy and sell the same day without being classified as a day trader depending on the frequency you do that. The rules in Australia may be different than the US, here it is 4 day trades in 5 business days to be classified as a pattern day trader.
I could regularly trade up to that but as long as I don't meet that definition I will not be classified as a "pattern day trader". My main point was about the repurchase of a new stock after the sale of an existing stock.
Also my point on day trading is based on a single trade in and out on the same day - the OP mentions nothing about multiple trades. Of course the frequency of these type of trades would determine whether someone is a day trader or not, which the definition of and rules may differ from country to country.
The OP's question didn't address free riding so I didn't address it beyond stating that he would need to wait to use the proceeds from the sale in a cash account. I hope this helps. Daniel Anderson 9, 2 13 Thanks for the warning. Sign up or log in Sign up using Google. Sign up using Facebook. Sign up using Email and Password. Post as a guest Name. You can buy a stock today and sell it later the same day. Feel free to verify share improve this answer.More...