Full question:
QUESTION IS ABOUT DAY TRADING- BOUGHT 50 SHARES OF XYZ 5-13- SOLD 50 SHARES OF XYZ ON 5-14- BOUGHT 50 SHARES OF XYZ ON 5-14. IS THIS A DAY TRADE? NEED EXPLICIT LEGAL DEFINITION WITH REFERENCES TO WRITTEN LEGAL DOCUMENTS.
- Category: Corporations
- Subcategory: Stock
- Date:
- State: Indiana
Answer:
Day trading involves buying and selling financial instruments, like stocks, within the same trading day to profit from price differences. According to the SEC (U.S. Securities and Exchange Commission), a day trade is defined as any trade that is opened and closed on the same day. Additionally, pattern day trading refers to executing four or more day trades within five trading days.
In your case, you sold 50 shares of XYZ on May 14 after buying them on May 13, and then bought another 50 shares of XYZ on the same day. The sale on May 14 qualifies as a day trade since it was closed on the same day it was opened. Therefore, this transaction meets the criteria for day trading.
It's important to note that if you are classified as a pattern day trader by the SEC and do not maintain a minimum balance of $25,000 in your trading account, you may face restrictions, including a freeze on your account for 90 days. To avoid this, you would need to either deposit sufficient funds or wait for the hold to expire.
This content is for informational purposes only and is not legal advice. Legal statutes mentioned reflect the law at the time the content was written and may no longer be current. Always verify the latest version of the law before relying on it.