Is the PDT Rule for US Traders Going Away Soon?

Trader’s Rejoice!!! Well maybe. Interesting developments for greater accessibility to market for retail participants could be incoming. Reports from various sources are pointing to the Possibility of the PTD rules that currently affect U.S. Traders and brokerages could be vastly reduced from current levels. Currently the rule states that traders need at least $25000  in capital in order to not be afflicted by this rule. The rule change in consideration currency is that this could be reduced to $2000 by the end of the year. Greatly increasing the opportunity for market participants to trade markets openly(depending on broker rules).

Currently many traders with low capital usually turn to other instruments in order to maximize profit potential in US markets. Options are a popular option for traders as they can maximize potential although with increased risk and technicals that many traders may not understand. Futures which are not regulated by the same restraints on stock trading also carry the additional issues such as barriers to entry and being always beholden to news both real and fake. While trading stocks is not risk free.(far from it) US Traders looking to participate in markets are really taking to this news.

The PDT rule was put in place in 2001 in the aftermath of the dot-com bubble bursting. Regulators were looking to protect inexperienced traders from blowing large sums of money in volatile markets. Although one will argue that dumb traders will find a way to blow their money regardless. This was prior to zero commission trading and increased automation that allows brokers to monitor individual positions in real time.

While there is no published timeline this will need to get approved by the SEC prior to final implementation. A word of caution though indulge me in my tinfoil hat for a second. If the market is looking for additional liquidity where can they find it easily? I would venture to guess that they want even more dumb money to enter the market. Make sure that you are not one of the traders that the market wants to steal from. All in all this move further create better access to markets and for those traders with smaller pocket books another avenue of opportunity.