Stock Trading and Other Things

Day trading rules: I have been buying and selling a certain stock over several days.....?

I have been buying and selling a certain stock over several days, obviously because I am making short term gains. My question is am I considered a day trader if I buy and sell the security in the same day 4 times in a 5 day period. or if I buy or sell the same security 4 times or more in the same 5 days? Like am I considered a day trader if I buy a security once every day for 4 days, would I be considered a day trader or must I buy and sell in the same day every day for four days. Im a little confused. Thanks!

Ive been doing really well with "day trading" SKF. I short it and buy at certain times. I cover my own rear with different trades and lock in a gauranteed return. my thing is I dont want to be labeled a day trader because I dont have the $25,000 to fork over.
ok I havent been buying and selling in the same day, I buy one day and sell the next. is that a day trader or a pattern trader?

Public Comments

1. yes u r a day trader

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2. Honestly, I'd consider day-trading LVLT, but only if you catch it at 2.50ish. You could probably mess with a 2.50-3.50 range.

But, be careful!!!
Day trading is extremely risky!!!!!

3. For tax purposes, you're a professional stock trader (day trader) if you are engaged in that activity for a brokerage, or if you say you are a professional. (There's a special election you can file with IRS.) The advantage of being a professional is that you get to "mark to market" at the end of the year-- in other words, recognize all your gains and losses on stocks you're holding-- but the disadvantage is, all your trading becomes ordinary income and not capital gain.

4. If you buy and sell the same security for 4 days in a five day period, not only are you considered a day trader but also you will be tagged as a pattern trader.

A day trader buys and sells a security in a given day, so they have no open positions at the close of business.

A pattern trader is any margin customer that day trades (buys then sells or sells short then buys the same security on the same day) four or more times in five business days, provided the number of day trades are more than six percent of the customer's total trading activity for that same five-day period.
As a pattern trader, you must carry a minimum equity of $25,000 at all times


5. Yes, you are a day trader. If your job is to be in the market each day you can apply to the IRS (just request it) for traders status. If you buy and sell the same security in a thirty day period you can be subject to wash sales which can eliminate the benefits of a losing sale.

There are other tax benefits as well such as mark to market. You may want to consider if incorporating as an L.L.C. would benefit you with additional write-offs not subject to the 2% AGI rules, not to mention writing off health care.