I have an account at zecco.com and I'm trying to figure out how the trading works. I know that if I have the min. of $25,000 then I can become a pattern trader (day trader).. but if I have less than that amount.. then I can only make a certain amount of tranactions every 3 or 5 days before all my money is processed and able to be used again. Is that all true?? Please help me get straight with the facts. THANKS!!
To avoid being labeled as a pattern day trader: three or less day trades within five consecutive business days. A day trade means the buy/sell occurred the same day.
In a cash account when you sell it will take three business days for that trade to settle. You can use those proceeds to buy another stock. But you can not sell that new purchase until the first sell has settled.
With a margin account you don't have to worry about the settlement rule. BUT if you have a small account and you are trading frequently, you do need to worry about overdoing it and getting a margin call. That is probably not a surprise you would want.
My recommendation: limit your trades to one or two per week. Spend most of your time researching so they are profitable trades.
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