Things You'll Need:
- $25,000 in a margin account
- Copy of New York Stock Exchange day trading information memo
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Step 1
Define your trading style. If you tend to both buy and sell the same stock in a day or several times within a week, you are considered a "pattern trader" by the SEC and are subject to special rules.
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Step 2
Ask yourself if you can afford to buy stocks, and lose, on borrowed money. If the answer is no, then even if you aren't a pattern trader, you may want to consider a different style of trading, such as swing trading or long-term investing.
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Step 3
Keep at least $25,000 in cash or securities in your trading account if you are a pattern trader.
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Step 4
Trade only from a margin account if you are a pattern, or day, trader. A margin account is one that holds a certain amount of cash or securities as collateral against speculative trades. Without a margin account worth $25,000 or more, you cannot day trade and still comply with SEC regulations.
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Step 5
Follow the rules to remain in good standing with the SEC. You don't want to lose your ability to trade because of a shortage in your margin account.
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Step 6
Refrain from withdrawing any amount you deposited into the margin account to cover a trade and meet your $25,000 minimum for two business days. Margin account worth is calculated as of the end of the previous business day.
