The Securities and Exchange Commission released a restriction order to day traders trading stocks. It is now in effect and must be followed by those involved. The restriction was created in order to prevent pattern day trading. Find out what this means.
Investopedia defines it as, “A SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.” If this seem confusing for you, (assuming you’re aspiring to become a stock trader), we urge you to enrol into a trading academy of your choice. In doing so, this enables you to learn faster than average and avoid making mistakes when you go live.
You can also be classified as a pattern day trader if you don’t have the required minimum account deposit of $25,000 USD necessary to trade stocks in the stock market. If the SEC found out about this, your account will then be frozen for 90 days unless you deposit the missing money to complete that $25,000 requirement. In case you don’t have the capability to fund your account, you don’t have a choice but to wait until the ban has been lifted. This is after the 90-day period.
What a downer isn’t it? However, there are some great alternatives should you get tired of such restrictions. My personal advice is for you to try the waters of futures trading or more specifically -trade e-minis. With just $1,000 USD, you can start trading e-minis plus you’ll get to enjoy its spectacular benefits. Ask any trader and all of them will agree that e-minis are great for beginners like you. If you want to know more about this financial instrument, contact The Day Trading Academy.