Today we're going to be talking about trading regulations and their impact on you as a Trader Now um there's a lot of out of obviously a lot of regulations out there. A lot of them don't necessarily affect you as a day trader but I think they're good things to know because they get talked about a lot and sometimes I think people look for like scapegoats and and and things to blame and like I want to kind of delineate the difference between regulations that matter and affect you and ultimately regulations that are just kind of like what ever you have to deal with it. So right off the bat the biggest thing I mean I I Almost Have to start with this, the biggest regulation that you're dealing with or or potentially dealing with is as as a you know an average retail Trader is the pattern day trader Rule Now was actually talking with the videographer and he was shocked at how many people was talking to his Uber driver and the guy was actually trading and like he couldn't figure out why he couldn't exit a position. um that he was in and and again the video we.

we do a lot of these trading videos together and he's like well are you under the PDT and the guy's like well what's that like like he didn't even realize that he only had three trades in a rolling 5day period and a lot of you don't like. listen I'd be the first to admit probably when I filled out my first brokerage account I probably didn't read anything signed the page dated it, sent it back and probably didn't read a single thing in it. But if you had a margin account. Okay, so let's lay out a few things.

a few parameters: A margin account allows you two things. It allows you to borrow money from your broker to increase your position sizes. Okay, so that you can instead of having ,000 of buying power most Brokers give you four to one. The sketchier Brokers will give you more.

but basically leverage allows you to trade. instead of $1,000 of stock. you could trade $4,000 of stock now. I did a lot of videos on margin.

Very dangerous, especially if you aren't well-versed in trading. Okay, remember margin Cuts both ways. Okay, margin is awesome when the trade's working because it amplifies your gains. But remember, margin is not a one-way Street If you're losing, margin amplifies your gains.

But this isn't about margin account. We've done a ton of videos on that. Check those out. But if you have a margin account which allows you to borrow from your broker, it gives you more buying power and it also allows you to short sell.

Okay, keep in mind you cannot short sell with a cash account. You have to have a margin account. So if you have a margin account, that means that you can only make three round trips. so in and out of the same stock in the same day in a rolling 5day period.

Okay, I'm going to repeat that I know it's a mouthful. I Know it's a bunch of gobbly good. One thing: I want you to write down, get out a notepad and write down. Anytime we discuss the pattern day Terrier rule or the PDT, you always have to remember the one of my favorite quotes from Ronald Reagan The nine most dangerous words in the dictionary are I'm from the government and I'm here to help.

Okay, that's the PDT In a nutshell: out of all of the silly, pointless, unintended consequences of things that the government has done through the years, the PDT might be the best example because what the PDT does is it actually like forces newer Traders to make terrible money costing decisions. Like, like so many people stay in trades because they don't want to use their last day trade. They stay in because they don't want to use any day trades. You know it's just it's a disaster.

But hey man, it is what it is. Until we vote these bums out, we're stuck with it. So as a PDT again, one more time, in and out of the same stock, in and out. a round trip three times in a rolling 5-day period.

Now, if you buy a stock at the end of the day and you sell it the next day, you're good. Didn't use a day trade. Um, if you buy it Monday and you sell it Wednesday it's just the same day and then you get three of those in a rolling five-day period. So if you make a day trade on Monday you make a day trade on Tuesday You make a day trade on Wednesday You don't have any more day trades until the next Monday the rolling five-day period from that first trade that was the video AER Uber Driver Basically he was out of day trades.

He couldn't exit the position. Now what will happen is if you violate the day the PDT which if you make that fourth day trade some Brokers will stop you. Most of them will alert you and let you do it anyway. Like they'll say hey, you're about to break the rules here.

Do you want to do this? If you do that, you make that fourth day trade. It's pretty Universal across every broker, they're going to flag your account and they're not going to allow you to trade for 90 days. They're basically tough crap you. you broke broke the rules.

You're on the bench for 90 days and it can vary by broker, but 90 is pretty much the standard. Now keep in mind one tip: if you do get flagged. Um, as far as I I haven't been under the PDT in like 15 years, but as far as I know, you can still get the one get out of jail free card. Okay, so I can't guarantee that.

but if you're watching this video because maybe you got you can't trade and you're looking for a solution first thing I would tell you, reach out to your broker and just say hey, I made a mistake forgive me Lord let me trade again. As far as I know most, Brokers will just be like okay, you screwed up you got your One Mulligan move on. Okay, so think of that Now the other situation is that you know it's just it's it's a pain like like I wish I could give you a better explanation of the PDT I wish there was a better solution. It sucks.

it really does like you if you're If you can't trade, it's invariably when there's the best opportunities out there. you miss them because you you have no day trades. uh and and again I think like I've heard so many nightmare stories of people that are down to that last day trade. They're in a losing position you know, and it's like 3:30 and that Stock's continuing to go against them.

They're looking at the clock and it's like Rocky you know? remember Rocky won like remember Rocky's goal wasn't to win, his goal wasn't to beat Apollo Creed He just wanted to go the distance. Okay, and that's it's very. It's like it's very applicable this cuz you're down a th000. now it's 345 and you're down, 1500 and you're just trying to make it to round 12 when the bell rings, ding ding ding and now you're down three grand.

You're bloody as hell, but you made it to the bell and that that happens a lot because you're like I don't have any day trades I don't want to use my day trade so that's where the unintended consequences happen. So I Tell people never put put yourself in that position, never put yourself in the position where you can't exit or you're you don't want to exit CU you're going to get flagged. Save that last day trade. Always keep it now.

Ways to deal with the PDT Number one if you're long bias: Okay, if you're a new Trader and you're mostly long bias I Tell people just don't have a margin account because I would prefer you not use margin as a new Trader Remember it amplifies your losses and I beg new Traders not to short sell until you learn how to trade. Love short selling. Crazy high probability of success once you know how to do it. So think about a cash account other ways around it and this always sounds sketchy.

but it's 100% legal is the PDT Back to the government regulations, it applies per account. so if you have an account at Erade, you can open up an account at TDM A trade you can open up an account at at Robin Hood Now it gets it sounds easier than it is because what happens is you end up with these three to four accounts which gives you more day trades. but like you got to log into this one, you got to log into this one. You're like hey, how many day trades do I have over here? Hey how many positions do I have over here? So it's not ideal, but it is a workaround.

So now you've got three four brokerage accounts now you got N9 or 12 day trades which I would hope as a newer Trader is enough. I mean if you're trading more than that that you know you want to, you know reassess if maybe you're overtrading. So the PDT is what it is. it's the number one regulation you deal with.

And then the last point I do want to touch on is you know insider trading and politicians I Know this is a hot button issue Nancy Pelosi And and all you know she's the most prominent one. But listen, both sides of the aisle are doing it. I mean Dan Khaw is a prominent Republican I think he's doing it more than any. he's trading more than Nancy Pelosi is.

So both sides are doing it and you know my. The only thing I want to say is it's legal. Like like I Think that people get in an uproar about Congress trading. You know they say they're not trading on Insider information.

It's like yeah, right. But um, it's one of those things that at the end of the day it doesn't matter. like like I'm a big personal responsibility guy I'm a big person. You know when it, when it comes to you know, like the Seren I'm a big fan of the Serenity Prayer You know, like Lord give me the ability I'm going to butcher it.

You know to to to change the things that I can change and be okay with the things I can't change. That was the worst paraphrasing of the sendy prayer ever. But like it does. getting mad about what Pelosi's doing or or what any of these other congressmen are doing.

it doesn't do anything. go to the booth like deal with that in the booth. but I see a lot of people just complaining they're losing money. they're on the opposite side of the trade and they're like I'm getting scammed by my congressman.

But it doesn't change anything. It's legal for them to do it. They'll always. it will always be legal.

I mean listen, if you think they're ever they, they'll talk about it occasionally. But if you think they're ever going to change it, welcome to your like. First day of seeing how the US Congress works. but it is what it is and there's nothing you can really do about it at the end.

So outside of that, those are the biggest regulations we really do with. I mean at the end of the day. um, there's a lot of regulations out there, but they typically don't affect the small retail Traders So get over the idea. You know, once you're over the PDT or once you're managing the PDT get over the fact that it's not anybody else's fault.

it's your own fault. The sooner you own your trades, the sooner you take personal responsibility and have discipline, the sooner you'll be a consistently profitable Trader That being said, if you're looking to take your trading to the next level, check out the daily income. Trader Uh, webinar series. We do six webinars a day during the week, two on the weekends, all through the day 100% free, showing you how to locate the best stock, showing you how to manage margin, showing you how to manage the PDT showing you how to you know Enter: exit, do research.

Use Alos. Use Art. We've actually got an artificial intelligence component, so it's a really cool way to learn more about trading. Beyond You know an 8 minute YouTube video and they're 100% free and 100% live all through the day.

Click that link, jump on one when your schedule permits. You can schedule them in advance and would love to see you there.