Can I bypass the PDT rule by using a cash account for cryptocurrency transactions?

DehvinApr 29, 2022 · 3 years ago3 answers

Is it possible to avoid the Pattern Day Trading (PDT) rule by utilizing a cash account for buying and selling cryptocurrencies? I've heard that this rule can limit the number of day trades I can make in a week, so I'm wondering if using a cash account would be a workaround. Can someone shed some light on this?

Cryptocurrency

PDT Rule

Cash Account

3 answers

Apr 29, 2022 · 3 years ago
Unfortunately, using a cash account does not allow you to bypass the PDT rule for cryptocurrency transactions. The PDT rule is a regulation imposed by the Financial Industry Regulatory Authority (FINRA) in the United States, and it applies to all types of trading accounts, including cash accounts. This rule states that if you make more than three day trades within a rolling five-day period, and the number of day trades is more than 6% of your total trading activity, you will be classified as a pattern day trader and subject to certain restrictions. Therefore, using a cash account does not exempt you from this rule.
Apr 29, 2022 · 3 years ago
No, you cannot bypass the PDT rule by using a cash account for cryptocurrency transactions. The PDT rule is a regulation that applies to all types of trading accounts, including cash accounts. It is designed to protect retail investors from the risks associated with frequent day trading. If you make more than three day trades within a rolling five-day period, and the number of day trades is more than 6% of your total trading activity, you will be classified as a pattern day trader and subject to certain restrictions. Therefore, it is important to be aware of and comply with the PDT rule.
Apr 29, 2022 · 3 years ago
As an expert in the field, I can confirm that using a cash account does not allow you to bypass the PDT rule for cryptocurrency transactions. The PDT rule applies to all types of trading accounts, including cash accounts, and is enforced by regulatory authorities. It is designed to protect investors from the risks associated with frequent day trading. If you exceed the allowed number of day trades within a certain period, you will be classified as a pattern day trader and subject to restrictions. Therefore, it is important to understand and abide by the PDT rule to avoid any potential penalties or limitations on your trading activities.