Pattern day trading rules or PDT rules are rules related to FINRA regulated brokers.

What is the pattern day trading rule?

The pattern day trade rule or PDT rule refers to the FINRA and SEC guidelines which state that a day trader must have at least $25,000 in equity on any day that they day trade, prior to engaging in any day trading activity. A pattern day trader can execute four or more day trades within 5 business days inside of a margin account. Forex PDT rule doesn’t exist and forex traders can trade without limitations. So far it seems that indeed new traders must have at least $25,000 in cash in order to begin day trading. This can be overwhelming and prevent many people from getting started. Fortunately, you do not actually need this sum of money to begin, you only need to abide by this if you fit the criteria for a day trader.

The pattern day trade rule or PDT rule applies only to all FINRA regulated brokers.

Let we see PDF rules and stocks trading

The last part of the sentence is the key piece of information “inside of a margin account”. The definition of a pattern day trader includes quite a few limitations.

Is there a PDT rule for forex?

The pattern day trade rule or PDT rule does not apply to forex traders because they are created only for stock traders for FINRA regulated brokers.

First of all, what exactly is considered a day trader?

If you’re interested in day trading then you probably have at least a bit of knowledge on what a day trade actually is but you may not know an important piece of information. The definition of a day trade is when you purchase and sell a stock between the market open and the market close for the same day. If you were to hold your position overnight then the trade would no longer be considered a day trade, it would instead be considered a swing trade.

Therefore the pattern day trade rule does not limit you from making more than three trades per week with a small account balance. The rule only limits you from making three intraday trades per week. You may be thinking to yourself that 3 intraday trades it not much at all. In my opinion, I would say that the pattern day trade rule is actually a good thing for new traders. The be impacted by this in the first place, you would need to have a relatively small account size. This small account size is likely due to a lack of experience, hence the small balance. PDT rule will prevent you from making a bunch of unnecessary trades and blowing your whole account as many new traders have done trying to trade between every dip and rise.

The second criteria to the pattern day trade rule

The second requirement to be considered a day trader is that you must make at least 4-day trades a week. This may not seem like a lot but that is actually quite a bit.

Leverage

If you’ve never heard of leverage, allow me to explain. Leverage is where the broker you are with will allow you to trade with more than you have. Some brokerage will put up a 4:1 ratio or even a 6:1 ratio. So basically if you have $1000, you could trade with $4000 or even $6000 in certain cases. Even though this may seem enticing, I would not recommend it. Using leverage is basically gambling. The reason for this is that you can lose much more than trading with your own money. This is because it will not feel like you are trading with your won money, therefore you will have a lot less emotional attachment to it. Using leverage is not recommended for this very reason. If you are not planning on using leverage then you will not need a margin account.

Margin account

The final part of the pattern day trader rule is that it only applies if you are utilizing a margin account. If you are using a regular cash brokerage account then the rule will not impact you.

The day trade limit of $25K

Let’s say that you have opened a margin account and do wish to make more than 4 intraday trades with a week. In this case, you will need to maintain a balance of at least $25k within your margin account in order to abide by the pattern day trade rule.

The day trading rule for an account with under $25K

If you have opened a cash or margin account with under $25K and wish today trade then this is still possible, you will just need to find loopholes with the rule.

As I stated before, if you have a cash account then you will be just fine to day trade without leverage and not have to worry about this rule. This is a great option since it will encourage you to be smart with your money and take calculated positions.

You will also be able to day trade in foreign exchange markets and forex if that interests you. You will be able to make more trades and utilize less money.

Why was the PDT (pattern day trade) rule put into place?
Pattern day trade was created to make sure that smaller inexperienced investors and traders don’t day trade until their accounts have values over $25,000. This amount for SEC represents enough risk capital to offset any self-inflicted damage trading might create financially.The primary mission of the SEC is to protect investors and maintain the integrity of the securities markets (both formal exchanges and over-the-counter).The SEC considers day trading to have a significantly higher risk than buy and hold strategies.

Situations where the pattern day trade rule may apply

Let’s say for example that you decide to open up a margin account with a broker and deposit $15,000. On day 1 (Monday) you decide to buy and sell leveraged shares of stock XYZ. On day 2 (Tuesday) you buy and sell stock ABC. On day 3 (Wednesday) you short sell DEF. Finally, on day 4(Thursday) you buy and sell shares of both ABC as well as XYZ. This would be counted as 5 trades in 4 days which would place you under the criteria of a pattern day trader. Let’s say in this scenario you have $20,000 in your brokerage account, in order to follow the FRNA guidelines, you would have to deposit an extra $5,000.

Tips for following the pattern day trade rule

In the beginning, this rule can cause a lot of frustration. It limits you on what you are able to do with your own money. Over time you will find ways to work around it! It can be tough at times to watch the market rise and fall and not be able to take any action. In this case, it would be a good idea to use a practice account t times. Paper trading is great for building your skills. I suggest that you do your best to maintain profitability and not lose too much of your paper profits. Paper trading is far easier than trading with real money. This is again because paper-trading will give you no emotional attachment as it is not real money. You’ve probably heard the statistic that 90%+ of day traders lose money. This is due to a lack of emotional discipline which must be formed over time and with practice. Contrary to popular belief, you don’t need to make that many trades in a week to achieve wealth. What’s more important is making the right trades. Keep reading to learn some more tips on how to avoid joining the 90% statistic!

Avoid using too much leverage

Although I already mentioned this, it deserves to be repeated. Using leverage is a great way to lose a large sum of money. Why you may ask? Because you are using someone else’s money on a position that may not work out. If you open up a cash account as oppose to a margin account then this is something you don’t have to worry about.

Don’t make more than three-day trades a week

This is especially important for newbie traders. This is a good rule to follow whether you have a margin account or a cash account. Buying shares of multiple stocks that interest you will hinder your concentration. When day trading it is important to stay focused which is why it is usually better to take fewer positions.

Focus on the 80-20 principle

The 80-20 principle is probably something you’ve heard of before. The 80-20 principle is something that can be applied to a wide variety of things. the stock market is a great aspect that it can be applied to. In the stock market. In the stock market, it basically means that about 80% of your income will come from 20% of your trades.

Set goals

Goal setting is something that is extremely important in general. Investing in the stock market is no exception. Goals are important in the stock market because without defined goals you won’t have anything to work towards. Think about what you would like to accomplish by trading stocks. Whether its financial freedom or buying a new Ferrari, setting goals is something you should definitely practice.

Learn as much as possible

If your a newbie to the stock market then the best advice I can give you is to learn as much as possible. Learning the ins and outs of the stock market will take time but it will be worth it because it will give you the best chance at making it big in the stock market.

Final thoughts

Now you know exactly what the pattern day trade rule is and who it impacts. Hopefully, you found this article informative as well as entertaining to read.

Pattern Day Trading Rules do not apply to forex, so all these article facts are important only for stock traders.

An Insight on Modern Forex Trading Essentials and Markets

Forex is the name given to foreign money and trading using foreign money. A trade using foreign money is the way towards converting one money into another cash for several reasons. These reasons can be influenced by businesses, exchanges, or travel and tourism. This blog discusses in-depth forex trading essentials. Read it and you will have your concepts clear regarding Forex markets and forex trading.

The foreign exchange market or forex market is a place where different monetary currencies are traded or exchanged. Foreign currencies are critical to people far and wide. If you are living in the U.S. and need to purchase a product from France, it is possible that you or the organization purchases the product from France and pays the French for the product in euros. This means that the U.S. merchant would require to trade an equal value of U.S. dollars into euros.

A global market is a place devoid of a focal commercial center for doing foreign trade. Currency trading is directed electronically and that implies that all trading happens using PC systems between merchants globally, rather a centralized exchange. The forex market remains open throughout the day, seven days a week, barring the weekends, and monetary currencies are exchanged across the world in major financial centers of New York, London, Tokyo, Frankfurt, Zurich, Hong Kong, Paris, Singapore, and Sydney. This means that when the U.S. trading day shuts down, the foreign exchange market commences over again in Hong Kong and Tokyo. The foreign exchange markets can be very dynamic at any time of the day, the price quotes in a foreign exchange market evolving continuously.

Forex tips and tricks that can help

Are you looking for the right forex tips and tricks that can help? If yes, then you have certainly landed on the right page. In this article, you will reveal a total of seventeen unique and helpful tips and tricks that you can apply right away. Note, these tips can be applied to trading options, stocks, and the commodity market. Plus, these tips and tricks can be used by any type of trader, irrespective of whether you are a swing trader, intraday trader, or positional trader.

Forex summary

Forex trading essentials tips are:

• Choose the ideal broker: This is certainly the most crucial starting point of your forex trading journey. Please ensure to have sufficient time to thoroughly check the available broker facilities and choose the right one. Your trader must be experienced, licensed, and trustworthy. In addition to it, the broker should be compatible with your particular trading style. Please avoid unauthorized, incompetent, and inexperienced brokers.
• Have your own strategy: Before you start trading, please make sure to spend adequate time to find and fix your goals. According to your goals, you must set up the right trading strategy. Also, make sure to follow the right trading discipline which is an absolute must.
• Be patient: Patience is very important in forex trading as the market is highly volatile. Since you’re a beginner-level trader, you should follow a go-slow approach. Do not make big money trades at once. Rather, you should start with small investments and spend time to understand the market situations and the risk factors. This will be the key to your overall success.
• Don’t be emotional: Being emotional in forex trading is an absolute no. You should be able to make clear, unemotional, and rational trading decisions. Also, you must control your stress and anxiety level in cases of a loss or if the market situation doesn’t favor you. To reduce the stress level, you should do proper risk management planning to identify potential risks and smartly mitigate them.
• Practice a lot: Practice is very essential if you wish to be a successful trader. Continued trading practice can help you garner consistent, successful, and top results. You can easily practice by creating a live demo account with various online trading platforms.
• Analysis: Successful trading also requires adequate research and analysis. So, before you kick-start a trading journey, please make sure to perform some research and analysis of the market, investment trends, economic situations, and geopolitical issues, etc.
• Be Realistic: No forex trading system can offer you a 100% profit. Hence, please be realistic about your profit potential and beware of failures/risks that you may encounter from time to time. The idea is to mitigate and avoid risks and achieve profits.
• Trading education: Be educated in forex trading. First of all, you must know the trading basics. In addition to it, you are recommended to analyze trends, news, and financial processes, and relevant articles and tutorials. Forex trading education requires time, patience, and devotion. And, once you’ve mastered this education, it will definitely benefit you.
• Take some breaks: After a prolonged and demanding trading session, it’s important that you must take some breaks. This will help you to clear your mind and further allow you to make rational judgments.
• Identify the right trends: To get success in forex trading, it’s essential that you identify the right trends and use them in your own favor. Spotting the right trends and applying them pro-actively can improve your success rate a lot.
• Choose the right trading condition: Picking the right trading condition is also quite important. Not only you should aim to get the best possible service, but also you must try to get favorable spreads.
• Planning: Before placing any forex trade, you should do the right planning. Do not place a trade without having a solid strategic plan. In addition to it, you must create a back-up plan in case the situation doesn’t favor you.
• Consider using charts: Using charts can be very helpful and useful when you are trading on multiple markets continuously. You can use the charts to easily grasp a clear visual representation of the numeric data. This data will help you make the right forex trading decision.
• Do not overtrade: Please do not attempt to make overtrades. Overstrades are very risky and they are subjected to losses. Do not place reckless trades. Instead, you are recommended to set up the trading plan and set up a maximum amount of trades that you can make per day and week.
• Never be greedy: This is the most important tip for forex trading. If you are greedy, it will bring unnecessary risks. You should target the profit amount as well as the maximum acceptable loss. Whenever you reach either of these two limits, please stop trading. Or else, it may incur more losses than your wins.
• Use stop-loss: Using stop-losses is a smart and meaningful idea. It reduces all the risks of losing all of your money/capital on a single bad trade. Basically, if you can not predict the close positions of a trade, it’s better to go for a stop-loss option.
• Experiment: Since the forex trading market is dynamic, you can’t follow any fixed trading strategy. Instead, you will need to evolve your trading strategy and be flexible with your strategy. Please feel free to learn and apply new and advanced trading methods. This will improve your trading results. You can also use advanced tools and features to enhance your experiences, such as the tick chart trader, the mini terminal, the indicator package, the trade terminal, the mini chart, and the trading simulator.

With this, you have revealed seventeen forex tips and tricks that can help. These tips and tricks can enrich your journey on becoming a successful forex trader.

Also note, success in trading depends on your hard work, practice, and patience. So, do not loose these three qualities ever. These three attributes along with the aforementioned tips and tricks will be your guideline for the ultimate trading success.

Forex Trading Essentials

It cannot be denied that there are some drastic pitfalls that can cause devastation for many traders. That is why it is important to give consideration to the forex trading essentials you need for better trading success. It is a good idea to conduct a comparison of your style of trading to some of these essential elements. You really should incorporate some of the essential elements when you conduct your trades on the forex market. Otherwise, if you do not do so, you will be setting yourself up for a high rate of risk.

Widen your perspective in regard to the time.

If you are not a trader on the forex who is well seasoned, then you should not dare to view a price chart for a period that is shorter than sixty minutes. Your judgment will experience being distorted as a result of the randomness in regard to the normal trades that take place on the forex market. But when you apply the usage of time frames that are longer, then your judgment will allow you to see the real picture. That is why it is recommended to use time frames that are noted as being sixty minutes and as much as four hours. It is even wise to apply the usage of daily charts when it comes to the planning of your trades.

Implement the reduction of the size of your position by using a maximum of five percent.

If you have trading capital in use upfront that is in excess of more than three to five percent, this is a big problem. When you apply the usage of leverage that is ranked as being high, it is too easy for you to get into too high of a risky situation. This causes many snares for several traders and this can also result in the quick destruction of your account. You must be able to know how to engage in the riding of the waves of volatility that are frequent occurrences within the forex market.

Allow your trade time to perform.

It is only possible for you to engage in the usage of this type of option in a manner that is effective in such instances that you ensure that there is the safe sizing of your position as in regard to point two that was already mentioned. The truth is that on the forex market, there is a dramatic fluctuation in prices. That is why it is imperative that you are certain that a loss truly is regarded as being a loss prior to the fact of you closing your trade that may be moving opposite of your intended plan. A stop-loss with a pip of thirty will usually prevent you from conducting your trade just as it seems like it is going to turn to your favor. You must be willing to permit for swings in prices that are larger. If you know the key trend for prices, then have some patience and allow things to turn to your favor.

Decrease your reliance on indicators that are technical.

It is to be noted that indicators that are categorized as being technical conduct the gathering of their data from events that have transpired in the past. Therefore, the truth is that indicators that are technical possess no power to provide indications of what will happen in the future. Those who are professional traders tend to experience high levels of success based on their knowledge concerning how the majority of people will respond to the data that the indicators that are technical provide. In essence, those who are professional traders do not rely on the direct data of indicators that are technical. It is imperative for traders to be able to gain a comprehension of the present key trends. This can be achieved by examining a simple moving average. Thus, it is wise to allow for the usage of a time frame that is longer.

Conduct trading only by using one or two pairs of currency.

When you are trading, it is a good idea to stick with using only major key pairs of currency. That means that you should not engage in applying the usage of crosses of currencies. Data that is fundamental is what is used for the sake of determining the prices of a currency. In order to be able to comprehend what will likely happen in the near future, it is necessary for you to engage in following the basic data that is provided concerning the pairs of currency of particular countries. It will be a difficult task for you to keep informed of the pertinent data on a regular basis if you engage in conducting trades in a wide spectrum of different currencies. There is a great opportunity likely to achieve a profit from each of your pairs, which is why it is advised for you to be patient to wait until you have reached a mature level of experience so that the information will be much easier for you to grasp prior to commencing trading in more expensive currencies.

Conduct averages in and out in regard to your trading efforts.

In such cases that your trading account possesses an amount of money that equates to less than fifty thousand dollars, it would be worth your effort to ensure that the brokerage firm that you use when trading will permit mini lots for your usage with your account. This will permit you to conduct averages in and out in regard to your trades. This is a wonderful method to increase the flexibility of your particular account. If this is your situation, but your brokerage firm does not grant the provision of mini lots, then it truly is in your best interest to consider using a different brokerage firm. This will empower you to have more success when you engage in the conducting of trades on the forex market. Therefore, this is truly a prudent step to take in order to reduce your level of risk and to prevent losses from occurring.

A SHORT HISTORY OF FOREX MARKETS

Stock markets are old, they existed for centuries. On the contrary, foreign exchange markets are new. People use the forex market to convert currencies for their advantages. In this context, it is relevant to say that the values of the foreign currencies vary and this feature of foreign exchanges has given rise to foreign exchange trading and services. Investment and commercial banks do trading in forex markets on behalf of the customers. There can be speculative opportunities for trading in one currency against another of individual and professional investors.

At the commencement, there was the usage of a system for bartering. This could entail the conducting of the exchanging of items with people as needs arise. However, there is evidence that the concrete limitations indicated the need for the implementation of other better channels of exchange that would be more widely accepted with higher levels of benefits for a wider range of people.

Therefore, metal coins were used. Then the use of paper forms of monetary value regarding governmental IOUs had to undergo the sanction of being approved by political powers during the time of the Middle Ages.

Before the time of the First World War, the majority of centralized banks provided support for their monetary values via the possibility to convert it to gold. However, sometimes there was the result of instability at the political level as a result of inflation that caused much devastation. This was linked to the expansion of the usage of paper money that did not carry gold coverage. Hence, there was the implementation of forex controls for the sake of granting protection for various nations.

The United States of America presented the Bretton Woods agreement during the time of the Second World War. This resulted in the agreement setting forth a system for exchange rates that were fixed that ushered in the fortification of the gold standard to some degree and also provided the stability of the US dollar at 35/oz. It also indicated fixed rates in regard to other major forms of currency to the US dollar and was deemed as gaining a state of permanence.

The past few decades have experienced the development of the forex achieving the status of being the largest trading market of its kind on the planet. It is noted that for most countries, restrictions regarding the flow of capital have been lifted. This has allowed the markets of the nations to become independent when it comes to the matter of settling the rates of their currency values according to their own perceptions.

SPOT MARKET, FORWARDS, FUTURES MARKETS, AND FOREIGN EXCHANGE

There are three separate ways that foundations, enterprises as well as people practice forex trade. Forex resources are exchanged by the spot markets, the forward’s markets, and the futures markets. Forex exchanging using the spot markets has been the largest market and this is because it is the genuine resource on which the forwards and futures markets depend. Previously, the futures markets were quite popular for brokers. This is because the futures markets were accessible to the individual investors for an extended timeframe. However, with the use of electronic-exchanging and because of forex brokers, the spot markets have observed a tremendous surge in action and currently, it excels the futures markets as the favored market for doing foreign exchanging for individual financial investors. When individuals use the forex markets, they for the most part use the spot markets. The forwards and futures markets have the potentiality to become increasingly famous as the organizations shield their foreign exchange hazards in the days to come.

The spot markets is that place where monetary currencies are bought and then sold according to their current cost. The cost of foreign currencies is dictated by demand and supply. The cost of the foreign currencies reflects things like the current rates of interests, financial performance, sentiments towards local as well as global political circumstances, as well as the perception of the performance of one currency against another. Whenever a deal is finalized, it is referred to as a “spot-deal.” Spot deals are bilateral transactions and in these transactions, one side makes the delivery of agreed-upon money to the other side and obtains a predetermined value of another currency at the agreed-upon foreign exchange rates value. After the closure of a position, real money is used to do repayment. The spot markets are normally known as that market which manages foreign exchanges in the present, however, these exchanges take about two days to complete.

The forwards and futures markets are very different from the spot markets as they don’t exchange genuine monetary currencies. They bargain using contracts that speak about a particular type of currency which has a certain cost for every unit and a future date for doing repayment. In the forward’s markets, contracts are bought and sold between two sides, who decide on terms and the conditions of the contract between themselves. In the futures markets, futures contracts are bought and then sold based on a standard-size and date for settlement on public commodities markets. Futures contracts have details like the number of units being exchanged, dates for conveyance or settlement, and minimum price hikes.

The two kinds of agreements that are discussed above are authoritative and are ordinarily made using money upon expiry or before expiry. The forwards and the futures markets have the potential to offer protection from risks while exchanging currencies. Typically, huge worldwide organizations utilize these business sectors to shield against future forex-rate fluctuations, yet speculators take part in these business sectors also.

FOREX USED FOR HEDGING

Organizations that are operating in foreign nations have a danger because of variations in money values when they buy or sell merchandise outside their local markets. Forex markets offer an approach to shield cash risks by mentioning a rate at which the foreign exchange will get finished. Often traders buy or sell foreign currencies in forwarding markets well in advance. This practice is referred to as how Forex is used for hedging. The advantages of Forex hedging is that futures contracts are often standardized as well as cleared by a central authority. However, in this case, the currency futures are less liquid as compared to the forward markets which are decentralized and exist in the interbank systems globally.

Conclusion
The forex permits the linking of banks as well as brokerage firms via the usage of an electronic network pertaining to the forex. Via the usage of this network, they are able to engage in the conversion of currencies from nations across the globe. Forex is regarded as being the primary financial market on the planet that demonstrates the highest level of liquidity. As well, it is the largest market of its kind on the planet. The daily volume of currencies that are dealt with each day is in excess of one trillion and nine hundred billion dollars in regard to the currency market. There are occasions when the dollar value exceeds the full volume in regard to all future markets and equities of the United States of America.

It is noted that the common perception is that commercial banks, investment banks as well as government centralized banks hold domination over the forex market. This is the reason that those who are private investors hold the preference to conduct their dealings via the currency exchanges. It is much simpler for them to gain access due to the technological innovations of today, such as the provision of the internet.

The widest span of currencies that undergo much trading on the forex tends to include the Japanese yen, the British pound, the Swiss franc, the US dollar, the Australian dollar, and finally the Canadian dollar. Trading on the forex takes place for a period of five days each week for twenty-four hours of each of those days. Dealers across the globe have constant access to the forex. There is no designated central location or a physical location in regard to the forex, though this is the case with the futures markets as well as the stock market. Two corresponding individuals conduct their transactions via the usage of a phone line or via the usage of an electronic network application.

As we know from theory, the bid price (sell price) represents the maximum price that a buyer is willing to pay for security, for example, forex pair price. The ask price (buy price) represents the minimum price that a seller is willing to take for that same security. By default in MT4 and MT5 bid price (sell price) can be seen but ask price usually is not visible.

So, how to show bid and ask price on MT4?

Traders can show and bid and ask price on MT4 or MT5 chart when press right-click in the chart and select “Properties” (or press F8) and then in Common Tab check “Show ask line” option.

Bid and ask prices will appear on the MT4 platform chart. When you watch bid and ask difference (spread) you can see that it is not fixed. Spread is changing and when is volatility high, the spread can be much much bigger. Important news and volatility can increase the bid and ask difference, wider spread.

Margin level XM

Margin is the minimum amount of money required to place a leveraged trade in your trading platform. Margin Call is a notification in MT4 and MT5 platform which lets you know that you need to deposit more money in your forex trading account or close losing trading positions. Margin Call is a notification that trader will get on email or in the platform when floating losses are greater than trader’s Used Margin.

But, what is the margin call level for the XM forex broker?

The margin call notification level for the XM forex broker (margin level XM) is 50%. That means if account equity drops below 50 percent trader will get a notification that the margin call level is very low and that there are possibilities in the near future that positions be liquidated (forcibly closed). XM stop out level is 20%. If the stop our level is reached (20% and lower) that all positions will be liquidated (forcibly closed).

Margin Call Level is a threshold (for XM broker is 50%) and A Margin Call is an event (notification that trader will get on email or phone etc.).
When Margin Level call reaches 50% after that trader can not open new trades. The best decision is to close losing trades or add more money into the account.