Interactive Broker & Number of Trades

[cpatte7372]

Hello,

I now have a margin account with IB. It is my understanding that I can now open and close 3 positions within 5 working days. However, I'm a little confused if 3 positions means open and close 3 positions of the same security or 3 positions of 3 different securities. For example, if I had 3 different stocks I wish to trade would I be allowed to open and close 3 different positions 3 times within 5 working days, totaling 9 open and closed trades. Or am I only allowed to open and close 3 positions in total?

I hope you understand what I'm trying to say.

Cheers

Carlton

[FibbGann]

You can only open 3 and close 3, within a 5 day period no matter what security it is.

Fibbgann

[cpatte7372]

Fibbgann,

Thanks mate.

Carlton

[BakedWafer]

Wait, so you could only place 6 trades total in 5-days? Cause if that is the case IB sucks. I thought this only applied if you had less that 25,000 in margin, isn't this the case?

[JayF]

BakedWafer,

You are correct that this applies to accounts that have less than $25k in equity. Below is IB's policy on this subject.

From http://www.interactivebrokers.com/
Pattern Day Traders Criteria and Restrictions

Customers who have made four or more securities day trades (open and close a stock or option position in a single day) within five business days are considered Pattern Day Traders. Pattern Day Traders are required to hold a minimum of $25,000 USD in equity (or USD equivalent), and therefore those customers without this minimum equity and who have completed three day trades within five business days will not be allowed to enter another trade. Once you are deemed a Pattern Day Trader you will not be allowed to make another securities trade until your equity is above $25,000 USD (or USD equivalent) or you notify Customer Service that you no longer intend to Pattern Day Trade and then standard stock margin requirements will apply. We will only take one request to change your Pattern Day Trader designation, and once the system re-designates you as a Pattern Day Trader for four or more securities day trades, your account must have more than $25,000 USD in equity to trade again. Customers who are never designated as Pattern Day Traders are subject to standard stock margin requirements.

Underlying delivery of option exercise or assignment count as a day trade. Underlying delivery of exercise or assignment of single stock future or lapse, exercise, or assignment of options do not count as a day trade.

[Anson]

Hey guys,

This only applies to Stocks and NOT Futures right? Just want to confirm?

Thanks!
Anson

[helenquenet]

The rule doesn't apply to futures or to Single Stock Futures, which is what I am using to get round the rule at the moment. Seems to work OK, just a bigger spread to cope with.

[Anson]

Originally posted by helenquenet
The rule doesn't apply to futures or to Single Stock Futures, which is what I am using to get round the rule at the moment. Seems to work OK, just a bigger spread to cope with.

Thank you Helen!

I'm about to open an a/c with IB. That's a big relief since I don't plan to put USD25k in there just so I can daytrade the eminis every now and then. Especially since I have another "main" a/c with a local broker.

Thanks!!

[helenquenet]

Just remember it's not IB's rule and therefore not their fault. It's a US law introduced as a knee **** reaction to a day trader who went round shooting people after he lost money. What I find odd is that if they were trying to stop people losing money they didn't include futures as well. Just as well for us they didn't

[Anson]

Originally posted by helenquenet
Just remember it's not IB's rule and therefore not their fault. It's a US law introduced as a knee **** reaction to a day trader who went round shooting people after he lost money. What I find odd is that if they were trying to stop people losing money they didn't include futures as well. Just as well for us they didn't

Yes indeed.

Wow... ok... Never knew the reason for such a rule. Thanks for the insight.