Due to an overwhelming request of questions about Day Trader Status I have decided to write this newsletter to look at these issues. Whether you know about it or not, you don’t want to accidentally learn about Day Trader Status by a notice from your brokerage firm saying that you are now tagged as a Day Trader!
WHAT IS A DAY TRADER?
A Day Trader is someone who does four intra-day trades in five consecutive trading days. Let me address some terms here to help you understand this better:
Intra-day trade: A trade that is opened and closed in the same trading day (round trip).
Five Consecutive Trading Days: These are calendar days that the market is open, all in a row. For example:
If the market was open on Monday through Friday that would be five consecutive days.
Then we would have Tuesday through Monday for the next five consecutive days (unless Monday was a holiday in which case it would then be Tuesday through Tuesday.
Next, we would have Wednesday through Tuesday, and so on. The key is five trading days in a row.
HOW TO AVOID IT
One of my favorite students, Debi D, taught me to use a calendar to record my...
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