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Tastyworks Pattern Day Trading (PDT) Limit. Can I Day Trade on Tastyworks?
Pattern day trading rules at Tastyworks. Active trader PDT requirements and limits for
margin and cash accounts above/below $25,000 balance. How many day trades does Tastyworks allow.
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PDT Accounts at tastyworks
tastyworks specializes in options and futures trading, and these assets are frequently traded on a short-term basis. But what about day trading them? It is possible to day trade at tastyworks, although you do need to be aware of some important rules first.
America’s Pattern Day-Trading Rule
tastyworks is based in the United States of America, and that means it must enforce the pattern-day trading rule. This is a somewhat notorious regulation that says any account that qualifies as a PDT account must have equity of at least $25,000. Thankfully, the regulations are pretty clear on what qualifies as a PDT account:
An account whose day trades make up at least 6% of total trading activity.
An account that places 3 or more trades of securities within five market days. Securities are investment products like bonds, stocks, equity and index options, closed-end funds and ETFs. It’s important to point out that futures are not considered securities. Although options on futures are, they do not count towards the 3-trade limit.
An account with margin. Cash accounts don’t qualify as pattern day-trading accounts.
If your account meets all three conditions (must meet all three conditions) then it’s a PDT account. If it meets only two conditions, it’s not a PDT account, and you don’t need to bother with the $25,000 requirement.
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Avoiding PDT Classification
The first thing tastyworks traders need to understand is that America’s PDT rule doesn’t apply to trades of futures contracts or options on futures. Because many traders use tastyworks for futures and options on futures, this is the first recommendation to avoid PDT classification.
Trades of equity and index options do count towards the “3 or more trades of securities.” So if you plan on trading options, you’ll need to keep your trading activity below that level. Alternatively, you could place your option trades inside a cash account, which would automatically avoid the PDT flag.
But not all option trades are possible inside a cash account. All of your major option spreads require margin. You would be able to buy calls and puts and sell covered calls and cash-secured puts. But that’s it.
Or you could keep day trades below 6% of total trading activity.
Day Trading with tastyworks’ Software
tastyworks recently rolled out a software update for its desktop platform. This new version includes bracket orders, which day traders often use. So you can enter stop-loss and take-profit orders along with your entry order, which must be either a limit or stop limit order.
To place a bracket order, you’ll need to pull up the trade ticket. To do this, first go to a security’s profile. You can do this by clicking on a ticker symbol in a watchlist or enter the symbol at the top of the platform.
Then click on a bid or ask number to generate the trade ticket. Next, select limit or stop limit as the order type. Then you’ll see a gray BRACKET button. Click on this and you’ll have the bracket order form. There are several time-in-force choices, including day orders.
tasty’s mobile app and browser platforms don’t have the bracket order ticket.
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Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
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