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How To Avoid Being A Day Trader With Greater Trades - Helpful Info And Strategies

Because of an overwhelming bombardment of questions about Day Trader Status I have chosen to write this publication to look at these difficulties.

Whether you know about it or not, you do not want to accidentally learn about Day Trader Status by a warning from your brokerage firm saying that you are tagged as a Day Trader!

What is a Day Trader?

A Day Trader is somebody who does four intra-day trades in five continuous trading days. Let me address a few terms here to help you understand this better:

Intra-day trade: A trade that is certainly opened and closed in the same trading day (round trip).

Five Trading Days: These are calendar days that the market is open, all in a row. For instance: If the market was open on Monday through Friday, that would certainly be five consecutive days.

Then we would have Tuesday through Monday for the next five consecutive days (unless Monday happened to be a holiday, in which case it would then be Tuesday through Tuesday.

Then, we would have Wednesday through Tuesday, and so forth. The key is five trading days back to back.

How to Avoid It

One of my favorite pupils, Debi D, taught me to use a calendar to record my intra-day trades. By putting an "X" on the day you do intra-day trades, (2 X's if you do two, 3 X's when you do 3 in that day) you can avoid accidentally getting to four by taking a look at your calendar.

Make sure you label the specific days the market is closed on your calendar. Your brokerage firm will most likely enforce the NASD specifications of maintaining a minimum of $25000 within your trading account - and you have 5 days to comply.

Tax Consequences with the IRS

Traders that purchase and sell securities regularly can report their purchases and sales leading to capital gain and loss, along with their deductible expenses.

If you're new to investing and are interested in learning about business mergers, the importance of a public shell, or possibly putting your funds into a company like capital pacific, it's best to contact a broker to help you make the most effective decisions with your funds.

Pleasant Trading!

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