Introduction
If you’re an active trader, you’re probably familiar with the Pattern Day Trader (PDT) rule. This rule, established by the Financial Industry Regulatory Authority (FINRA), requires traders with less than $25,000 in their account to limit their trading activity to no more than three round trips in a five-day period. Violating this rule can result in your account being flagged as a PDT account and subject to restrictions. However, there are ways to get around this rule and continue trading as you desire. In this article, we’ll explore some of the most effective strategies to help you get around the PDT rule in 2023.
Strategy 1: Open a Cash Account
One way to avoid the PDT rule is to open a cash account instead of a margin account. With a cash account, you’re only able to trade with funds that you have available in your account. This means that you won’t be able to use leverage, but it also means that you won’t be subject to the PDT rule. With a cash account, you can trade as frequently as you like without worrying about violating the rule.
Strategy 2: Trade Options
Another way to get around the PDT rule is to trade options instead of stocks. Options trading is not subject to the PDT rule, so you can trade as frequently as you like without worrying about the restrictions. Options trading also allows you to leverage your trades, which can increase your potential profits.
Strategy 3: Use Multiple Brokerage Accounts
If you don’t want to open a cash account or trade options, another strategy is to use multiple brokerage accounts. By using multiple accounts, you can spread your trades across different accounts and avoid exceeding the PDT limit on any one account. This strategy requires more work and organization, but it can be effective in allowing you to continue trading as you desire.
Strategy 4: Increase Your Account Balance
The most straightforward way to get around the PDT rule is to increase your account balance to over $25,000. Once your account balance is above this threshold, you’ll no longer be subject to the PDT rule and can trade as frequently as you like. While this strategy may not be possible for everyone, it’s worth considering if you’re serious about day trading and want to avoid the restrictions of the PDT rule.
Conclusion
The PDT rule is a restriction that can limit the trading activity of active traders with less than $25,000 in their account. However, there are ways to get around this rule and continue trading as you desire. Whether you choose to open a cash account, trade options, use multiple brokerage accounts, or increase your account balance, there are strategies available to help you get around the PDT rule in 2023. By exploring these strategies and finding what works best for you, you can continue day trading with the freedom and flexibility you desire.
