Working Capital Discrepancies

[ABeespackBags]

In the United States, Is it possible to buy and sell the same stock on the same day? I heard day traders can do this, and you need to have at minimum of 25K in the account in order to be a day trader. If I have 25K in my account, do I automatically become a day trader and be able to buy and sell the same stock on the same day? Or I have to apply for it? Do all stock brokers allow you to do day trades? I guess my question is are are the steps for becoming a day trader, so I can buy and sell stocks on the day?

[acaefwqf38]

I understand there are risks. I am looking for how to do it, because every time I buy a stock I have to wait at least 3 days before I can sell it.

[adufutuvorug]

Because it takes 3 business days for the actual transfer of stock to occur after you buy or sell to the next owner, your cash is tied up until that happens. This is called the settlement period.
Therefore, brokers offer "margin", which is a form of credit, or loan, to allow you to keep trading while the settlement period occurs, and in other situations unrelated to the presented question. To do this you need a "margin account", you currently have a "cash account".

[NeverEnough]

The caveat of having a retail margin account (distinct from a professional margin account) is that there is a limited amount of same-day trades you can make if you have less than $25,000 in the account. This is called the Pattern Day Trader (PDT) rule. You don't need $25k to day trade, you will just wish you had it, as it is easy to get your account frozen or downgraded to a cash account.
The way around THAT is to have multiple margin accounts at different brokerages. This will greatly increase the number of same day trades you can make.
Many brokers that offer a "solution" to PDT to people that don't have 25k to invest, are offering professional trading accounts, which have additional fees for data, which is free for retail trading accounts.
This problem has nothing to do with:


preventing you from inadvertently running afoul of wash-sale rules
sneakily selling you on trading desks
sneakily promoting long term investing
trying to prevent you from subjecting yourself to short term tax rates

So be careful of the advice you get on the internet. It is mostly white noise. Feel free to verify

[akvukinaajqo]

You should not have to wait 3 days to sell the stock after purchase. If you are trading with a cash account you will have to wait for the sale to settle (3 business days) before you can use those funds to purchase other stock.
If you meet the definition of a pattern day trader which is 4 or more day trades in 5 business days then your brokerage will require you to have a minimum of $25,000 in funds and a margin account.