Try To Avoid Day Trader Status With Greater Trades - Useful Information And Strategies
Due to an overwhelming bombardment of questions about Day Trader Status I've decided to publish this newsletter to look at these concerns.
No matter if you know about it or not, you don't want to unexpectedly learn about Day Trader Status by a warning from your brokerage firm stating that you are now tagged as a Day Trader!
What exactly is a Day Trader?
A Day Trader is somebody who does four intra-day trades in five continuous trading days. Permit me to address a few terms here to help you fully grasp this better:
Intra-day trade: A trade which is opened and closed within the same trading day (round trip).
Five Consecutive Trading Days: These are typically calendar days that the market is open, all in a row. For instance: If the market was open from Monday through Friday, that would be five consecutive days.
Then we'd have Tuesday through Monday for the next five consecutive days (unless Monday happened to be a holiday, in that case it would then be Tuesday through Tuesday.
Next, we'd have Wednesday through Tuesday, and so on. The key is five trading days back to back.
Ways to Avoid It
One of my favorite students, Debi D, taught me how to use a calendar to record my intra-day trades. By putting an "X" on the day you do intra-day trading, (2 X's if you do two, 3 X's if you do 3 in that day) you'll be able to avoid accidentally getting to four by taking a look at your calendar.
Be sure you mark the days the market is closed on your calendar. Your brokerage firm will most likely apply the NASD requirements of keeping at least $25000 within your trading account - and you've got 5 days to abide by that rule.
Tax Issues with the IRS
Traders that purchase and sell securities often can report their purchases and sales which results in capital gain and loss, and their deductible expenses.
If you are new to investing and are interested in learning about business mergers, the importance of a public shell, or even putting your money into a company like capital pacific, it is best to call a broker to help you make the very best choices with your money.
Happy Trading!
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