Day Trading RulesDay trading rules regarding margins and requirements have changed significantly during 2001. The new rules would apply to you if you are a Pattern Day Trader (PDT) who makes four or more trades within five days. You will be exempted from this new rule if your day trading activities don’t exceed 6% of your total trading activities over this period. After the changes in rules the buying power of day traders has increased tremendously. Now you have access to 4:1 margin. However, it is up to you to utilize this raised buying power. There are substantial changes in day trading rules for pattern day traders. The most important is that you need a minimum of $25,000 in order to open a margin account as compared to the previous requirement of $2000. You have to keep the minimum requirement funds for at least a couple of business days. Many brokers these days would require all the PDTs to maintain the minimum requirement of $25,000 even if these traders are trading with a cash only account since these new day trading rules are not very clear about trading from cash accounts. Trading Center & Profitable Ideas
After 2001, there have been significant changes regarding how margin calls are handled. In the past if you sold a position and repurchase it on a same day that was opened on previous day was termed as a day trade and invited margins calls. Now, this practice is eliminated as the sale of the position is considered liquidation of the existing position and the repurchasing is considered opening a new position. Moreover cross guarantees for meeting the margin calls and minimum equity requirements are prohibited now. According to the new day trading rules, you are responsible for meeting minimum equity requirements and margin calls. According to the new day trading rules, your buying power will be reduced to half if you receive a margin call. Until the call is met you will have only 2:1 margin instead of 4:1. If you are a PDT and if you do not meet the call by the 5th business day, you will be required to limit yourself trading on a cash basis for ninety days until you meet the call. If you are a swing trader or a position trader you are not affected by the new day trading rules. However you should be careful. You have chances of considered to be a pattern day trader if you mix styles or take stops in the same day the positions set up since only six trades from the hundred trades you execute within the five days can be day trades before you are stamped as a pattern day trader. You should know the latest day trading rules since these rules are as important as your trading strategies. Having confidence in rules and regulations regarding your day trading will boost your confidence in trading activities  Return from Day Trading Rules to Trading Code Revealed Home Page
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