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Stock Market Training: How to Avoid the Pattern Day Trading (PDT) Rule - YouTube
Channel: ClayTrader
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one of the most annoying things in all
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the stock market not being able to trade
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as much as you want because you have a
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small account in this video I'm going to
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give you the solution to this very
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common problem so in this video I'm
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going to talk about how to get around
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what is known as the pattern day trading
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rule pretty much this is what holds
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people back from being able to trade as
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much as they want but there are some
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ways around it and I got to give credit
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where credit's due I was actually
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unaware of couple these things but then
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through the chat room and talking with a
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couple members they brought them out and
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I thought wow this is truly
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game-changing for the people with
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smaller accounts so what I want to do is
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just go over some simple steps that you
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can do to get around this rule and
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basically be able to trade as much as
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you want so first thing that you need to
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do in this process so let's talk about
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the process here is you need a cash
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account cash account not margin now what
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I was unaware of is that the pattern day
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trader rule that applies to margin
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accounts but not cash accounts so that
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step is crucial cash account is what you
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either need to open up a new account as
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or change your current account to but
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it's all about the cash account second
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thing you need to do is learn options
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now you may be thinking oh great I got
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to learn something new well options I
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promise are not that difficult
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especially if you're just looking to
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trade them and I have a course for it
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sure I'd love for you to buy my course
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but even if you don't point being for
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this all to work got to learn options
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but options are very very similar to
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stocks sure they're a little bit
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different now there are very complex
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strategies out there things can get
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pretty intricate and detailed but there
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are other very simple ways to approach
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options and like I said that's what I
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teach in the course the very very simple
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approach but regardless options need to
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be learned but don't be intimidated by
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that they're truly not as bad
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as you know what a lot of people kind of
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a stigma that surrounds them they're not
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nearly as bad as what for me if for a
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long time I thought they were super
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complex and while you can make them
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super complex they don't need to be that
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way but second thing is got to learn
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options and the key thing here you don't
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need to do anything but it's what
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options allows you to do now the thing
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you may be thinking is wait why do I
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have to learn options if I can just
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change it to a cash account for my
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stocks then I'm fine
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true but the bad thing here is with
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stocks let's so let's just talk about
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stocks over here they have what is known
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as t + 3 which means even after you
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trade you have to wait three days for
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your money to settle in other words you
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make a trade you have to wait three days
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before you can use that money again
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that's the easiest way to look at it so
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you make a trade now you got to wait
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three days before you can access that
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money again
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but with options the rule is T plus one
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so in other words you only have to wait
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one day or in other words you make the
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trade on Monday Tuesday you're going to
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have access to that money again that is
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huge the t plus one is huge again cash
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account sure it doesn't it would applies
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to stocks - as far as a pattern day
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trader rule but this the stumbling block
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is the t plus three you have to wait
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three days in order to get access to the
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money but with options only have to wait
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one day so again on Monday you can make
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a trade at an option and then Tuesday
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your money is available to you once
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again so let's look at it like this
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let's say that you have five hundred
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dollars in your account and you say you
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know what on Monday I want to divide
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this into a two hundred dollar trade a
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two hundred dollar trade and a one
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hundred dollar trade you maybe think how
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that's going to be kind of hard to make
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money with using that small amounts with
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options that is more than enough so that
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is just kind of one of the hidden things
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of options is you don't need a lot of
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money to make money so right here let's
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just say that this is all on Monday
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you have three trades here right and
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they can all be de trade so you buy and
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sell an option with 200 you buy and sell
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an option with 200 you buy and sell an
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option with 100 right there's three days
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so you would be done at this point so
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Monday you're all done but then when
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Tuesday rolls around because of this
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beautiful thing over here you only have
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to wait one day Tuesday comes around you
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can do that same thing again 200 there
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200 there hundred there if you made
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money on Monday then you could maybe
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even do more trades let's say you made
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$100 on Monday well now you got another
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hundred dollars you could use so on
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Tuesday you can technically do four
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trades you know it's all going to vary
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obviously but the point being is as soon
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as Tuesday comes around you have access
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to everything that you had on Monday
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whereas with stocks you'd have to wait
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three days for things to settle so let's
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just say you did three trades a day
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there's five days in a week so you could
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have fifteen trades per week if you
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wanted to obviously if you had more
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money in your account you could do even
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more trades but the point being with
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stocks you're not going to have 15
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trades a day or fit excuse me 15 trades
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a week if you only have $500 in your
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account if you've been around you
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already understand that maybe you've
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already tried and you're thinking yeah
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you know the the t + 3 the 3 day
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settlement you know that's that's
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killing me so again with $500 and just
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stocks even if you have a cash account
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you're not going to be having 15 trades
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a week that that's just not going to be
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happening but with options thanks to the
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t plus 1 rule you could literally have
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15 trades per week if you wanted to
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divide that up maybe think well that
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seems a little too many yeah maybe a
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little too many but it's just for you
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know just for example sake to show you
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how many trade you could actually start
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to do thanks to the t plus 1 and the
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cash account that options allow you to
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have so if you haven't really looked
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into options or just think either too
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complicated
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give them a try this like I said as far
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as I'm concerned it's game-changing
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there's so many and it's one of the big
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questions I get is there any way does a
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pattern day trading rule does it apply
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to to me it can I get around it yeah you
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can through some other ways you can get
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around it by going offshore and stuff
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like that but I mean did you hear it I
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said offshore if you want to you know
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kind of invite the IRS to come audit you
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you know I guess that's your prerogative
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but when
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there's ways like this that are out
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there that are completely legit don't
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require offshore brokerage accounts or
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anything like that
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you know I think I think this is a much
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easier and efficient path to being able
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to trade more often so like I said I do
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offer a course on options you can click
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a link down in the description box if
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you're interested in learning about that
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course and like I said don't don't
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equate options with complicated that's
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what I did for the longest time and it's
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just it's just not the case that can be
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very straightforward and simple and
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that's what I tried to do in the course
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so check that out if it sounds like
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something that you want to pursue but
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bottom line you know whether or not you
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want to learn from for me in my course
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I'd get out there and consider given
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options to try because you're going to
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have a lot of flexibility and it is
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truly a solution to the very annoying
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very just very talked about pattern day
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trading rule
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