Remove Pattern Day Trader Status on TD Ameritrade Quickly

Are you a frequent trader with TD Ameritrade and have been hit with a Pattern Day Trader (PDT) status? This can be frustrating for traders who want to place more trades than allowed per day under this status. Luckily, there are ways to remove this restriction and regain full trading privileges. This article will walk you through how to remove your Pattern Day Trader status with TD Ameritrade.

Understanding Pattern Day Trader Status

Before we dive into how to remove PDT status, it’s essential to understand what it is and how it affects your trading. The Pattern Day Trader rule is a regulatory requirement enforced by the Securities Exchange Commission (SEC) requiring a minimum account value of $25,000 for those who place more than three intraday trades within five business days.

If you are hit with Pattern Day Trader status, it restricts your ability to place trades. You will only be allowed to place three intra-day trades per five business days, limiting your trading options. Getting rid of PDT status will allow you to trade more frequently and with fewer restrictions.

Ways to Remove Pattern Day Trader Status

There are two primary methods to remove PDT status with TD Ameritrade, and we’ll go over both options below.

Method 1: Increasing Account Balance

The easiest and quickest way to remove Pattern Day Trader status is by meeting the SEC-required balance minimum of $25,000 in your TD Ameritrade account. Increasing your account balance will remove the limits placed on your trading, and you will be free to execute as many trades as you want.

Keep in mind that it might take a few days for TD Ameritrade to recognize the increased balance and remove PDT status from your account. Still, once it is removed, you can continue to trade freely without restriction and without fear of violating any SEC regulations.

Method 2: Wait it Out

If you do not want to increase your account balance, or that option is not feasible, there is an alternative option – wait it out. Once your account is flagged as a Pattern Day Trader, you will be restricted for 90 days. After 90 days, the PDT status will automatically be removed.

This option is ideal for those who do not need to trade frequently and can wait a few months before trading again without restriction. It’s essential to understand that not placing any trades during the 90-day restriction period is necessary, as any trades will reset the PDT status count to zero, extending the restriction.

Preventing Future Pattern Day Trader Status

Once you have regained full trading privileges, it’s essential to take steps to avoid getting hit with PDT status again in the future. The SEC’s PDT rule is in place to protect traders and regulate the markets, so it’s vital to follow best practices and remain compliant.

Trading Less Frequently

The obvious way to prevent PDT status is to trade less frequently. If you’re pushing the line with the number of trades you’re making, consider scaling back to avoid the 3 trades in 5 business days threshold. Restricting your trading frequency, however, can potentially limit potential profits, so it’s important to find the right balance.

Adding Funds to Your TD Ameritrade Account

As mentioned earlier, the easiest way to prevent PDT status is to meet the regulatory account minimum of $25,000. If you have the funds available, consider adding them to your TD Ameritrade account to eliminate any future restrictions related to PDT status.

Unexercised Options Margin Account

Another way to avoid PDT status is to open an “Unexercised Options Margin Account” or UOM account, which allows traders to execute unlimited trades without being flagged as a Pattern Day Trader. This is because the account is not subject to the PDT rule due to its unique margin requirement.

Conclusion

Becoming a Pattern Day Trader can be restrictive, requiring you to follow specific trading rules and limiting your trading frequency. If you’ve been hit with PDT status with TD Ameritrade, don’t panic; there are solutions to remove it and regain your full trading privileges. The simplest and quickest way is to meet the account minimum of $25,000, while waiting out the 90-day restriction period is an alternative option. By following best practices and precautions, you can prevent getting hit with PDT status in the future and trade without restriction.

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *