What does the trader do the day?
According to the Securities and Stock Exchange Commission (SEC), the day of the pattern is a person who carries out at least four days of trades in a five -day period. Nowadays, in this five -day period, trades now have at least six percent of the total business. Since daily trading exposes the trader a number of danger and can result in unethical behavior, the SEC has set specific requirements and restrictions on the daily pattern trading. In order to carry out daily trading of the pattern, the margin must maintain the balance of at least $ 25,000 in the US (USD). In addition, this account must be introduced before the pattern of the pattern can perform any trades. However, brokerage companies are not responsible for monitoring or confirmation that the minimum capital is maintained daily.
Exchange rule 431 concerning margin requirements is responsible for determining other rules concerning trading in daily pattern. This rule states that when the amount of daily trades droppedNot at a minimum of six percent, despite the number of trades, the trader will no longer be considered a commercial model. However, any person carried out by occasional trades will be immediately considered a daily pattern when the criteria are met. Broker companies that believe that the client will carry out these stores, must register the customer as this type of merchant immediately. This means that the company does not have to wait for five working days to find out what the customer is doing. Once classified as a daily pattern, it must pass three months without a viable store to remove the restriction.
One of the main aspects of a daily pattern trading is the concept of a "return path". When the trader buys and sells the same shares three different Times in the matter one day there was a "return journey". If this happens more than once every four -day period, the account must be frozen for 90 days.
Merchants of the day are subject to so many rules for the desire of sec to make sure that peoplePerforming these trades understand their actions. Opponents of regulations claim that these rules provide back government supervision and restrict traders' rights. However, due to a number of unethical events of daily traders over the 90s. SEC has decided to introduce rules on daily trading in 2001.