Stock Trading and Other Things

Pattern Day Trading Rules? Does it apply to all your accounts or each?

So I am clear about the 25k rule, 3 daytrades in 5 days.

My question is:

If I have two brokerage accounts.... ie. scottrade and TOS...

Does the rule count for the two combined or for each one, meaning I can do 3 day trades in scottrade and 3 daytrades in TOS?

Thanks

Public Comments

1. Each account is separate.

Q: Can I cross-guarantee my accounts to meet the minimum equity requirement?

A: "No, you can't use a cross-guarantee to meet any of the day-trading margin requirements. Each day-trading account is required to meet to minimum equity requirement independently, using only the financial resources available in the account."
http://www.finra.org/Investors/SmartInvesting/AdvancedInvesting/DayTrading/P005906

Basic Definition:
"executes 4 (or more) day trades in 5 business days"
http://en.wikipedia.org/wiki/Pattern_day_trader

Day Trading - SEC
http://www.sec.gov/answers/daytrading.htm

Day Trading - FINRA
http://www.finra.org/Investors/SmartInvesting/AdvancedInvesting/DayTrading/P005906

Day Trading - FINRA Margin

"pattern day trader," which includes 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."
http://www.finra.org/web/groups/industry/@ip/@reg/@notice/documents/notices/p003881.pdf

One is normally required to disclose that they have brokerage accounts at more than one firm. This question will be on the firm's account application such as:

Q: Do you have brokerage, retirement or other accounts at another institution?

Account Type: Brokerage, IRA, etc.
Location: ____________________

This is a compliance question. Separating the accounts reduces your margin total ability, however each account is subject to rules as if their were stand alone accounts.

2. Each account is separte.
Each firm has their own policy aswell

Normally this flag is raised because you buy and use up most of your money and sell before settlement day (3 days after the orignal purchased) Then you are using that money to buy something else(keep in mind there is also a 3 day day when selling) Even though you see the balance reflected on your acct immediately.

The firm looks at it this way. You haven't paid for the first transaction yet and you are already buying somethinig else

I do well over that number and haven't raised a red flag

You may also want to look into margin (make sure you know wha't you are getting into) as this will get rid of the red flag raised by day trading.

3. There really is no way to monitor accounts across firms. Each account has to follow the rules independently.

4. Each account at a brokerage firm stands on their own and each brokerage firm stands on its own.

Scottrade stands on its own and TOS stands on its own, they are not combined.