I understand the intention of three day trades per week was to reduce the risk and losses incurred. Over the years, it seems to have actually exposed traders to more risk. Allowing no more than three round trip trades in five business days has created a burden on traders as well as brokerage firms. Traders who wish to trade in small amounts to build capital typically do not have access to the minimum deposit required to avoid being flagged as PDT, and in many cases will place more impulsive trades. Another issue with the PDT rule is the risk of overnight exposure which can lead to large losses.
I believe a fair adjustment to the rule would be to increase the number of day trades allowed in a five day period. I think allowing ten round trip trades per week is a more reasonable amount. It allows traders to average their daily trades more sensibly throughout the week and avoid overnight losses, thereby decreasing risk to both traders and brokerage firms. It also makes it more likely that responsible traders will set stop loss orders or sell a losing trade rather than holding it overnight.
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Anonymous Comment On Regulatory Notice 24-13
I understand the intention of three day trades per week was to reduce the risk and losses incurred. Over the years, it seems to have actually exposed traders to more risk. Allowing no more than three round trip trades in five business days has created a burden on traders as well as brokerage firms. Traders who wish to trade in small amounts to build capital typically do not have access to the minimum deposit required to avoid being flagged as PDT, and in many cases will place more impulsive trades. Another issue with the PDT rule is the risk of overnight exposure which can lead to large losses.
I believe a fair adjustment to the rule would be to increase the number of day trades allowed in a five day period. I think allowing ten round trip trades per week is a more reasonable amount. It allows traders to average their daily trades more sensibly throughout the week and avoid overnight losses, thereby decreasing risk to both traders and brokerage firms. It also makes it more likely that responsible traders will set stop loss orders or sell a losing trade rather than holding it overnight.
Thank you for your time.