Stock Trading and Other Things

can someone explain the rules on day trading with 25k?

so let me get this straight if i have 25k i can move in and out of the market as much as i want correct? so for an extreme example i can move in and out 100 times as long as i keep above 25k? also if i only have 25k and my buying power is 50k, but i move in and out repurchasing stocks using only what i put in (25k) am i using margin? for example i buy a stock for 25k wish is my cash i put in. i sell and buy 20 times, am i using margin? if no, then i won't be charge interest right?
omg i dont get it now so then what's a pattern day trader? i thought a pattern day trader can trade limitlessly as long equity is 25k or above

Public Comments

1. No, you are wrong.

The 25k rule is:

If your brokerage considers you a DAY TRADER you are given 4x buying power. So in example you have 25k you can use 100k everyday. Regardless how much money you end up with at the end of they day you cannot pass the 100k limit. If you do pass the 100k they'll give you a MARGIN CALL to ensure that you are not trading with money you don't have. Be very very careful doing your math and ensure that you NEVER pass your limits.

If you go over your limit and a Margin Call is given you have to come up with the money 3 days from the call date. If you are unable to come up with the money they'll restrict your account for 3 months ( Note that this option is only if you have surplus money ).

If you get a Margin Call and you are on the red ( loss ) and you can't come up with the money the brokerage can and will sell any positions you have and take legal action to recuperate the money plus interest.

Like I said earlier, be very careful not to pass the limit on a given day. You will regret it big time.

Here's an example:

You start the day with 25k and with the 4x buying power you now have 100k. You buy 100k worth of XYZ stock and suddenly it doubles and you now have 200k. In this case you have to stop trading because you already used the 100k limit regardless of the profit you made because: It takes 3 business days to clear those funds so in reality that profit is non-existent till they clear.