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Wells Fargo Pattern Day Trading (2024)
Pattern day trading rules at Wells Fargo Advisors. Pattern day trader PDT requirements and limits for
margin and cash accounts above/below $25,000 balance.
Can you day trade on Wells Fargo?
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The Pattern Day-Trading Rule at Wells Fargo
Did you know that you can day trade at Wells Fargo's brokerage (WellsTrade)? Yes, it’s true. The brokers do permit this type of short-term trading. But you will have to follow some important guidelines to do it without having your account shut down. Here’s what you need to know:
PDT Rules from FINRA
In the United States, the organization primarily responsible for regulating day trading is FINRA, the Financial Industry Regulatory Authority. The basic requirement is that any account designated as a PDT account must maintain at least $25,000 in equity at all times.
What exactly qualifies as a PDT account? According to FINRA, it:
1. Is a margin account (a cash account never qualifies as a PDT account)
2. Executes at least 4 trades of securities (stocks, option contracts, funds, bonds, or other securities) in a five-business-day period.
3. Has day trades that make up at least 6% of the account’s total trading activity.
Circumventing the PDT Rule
To avoid needing $25,000 in account equity, there are a few strategies you can use. For instance, you could limit yourself to 3 security trades each week. Or you could day trade forex, cryptocurrencies, or futures, which aren’t classified as securities and thus are not subject to the PDT rule.
Another effective method to bypass the PDT requirement is to trade using a cash account. This means you can’t use borrowed funds and must wait for trades to settle before using the proceeds to trade again. With the recent regulatory update, stock and option trades now settle the next business day.
Swing trading is another alternative. This involves entering a trade one day and exiting it at least the next day or later, which does not trigger the PDT rule.
If necessary, you could also consider an offshore account that doesn't follow the U.S. PDT rule, though this involves higher risks and should be approached with caution.
Using WellsTrade’s Software to Day Trade
Unfortunately, WellsTrade lacks sophisticated software that many day traders require. There is no desktop program, browser platform, or advanced website available. The broker’s basic trade ticket does not support bracket orders; you have to manually set exit orders after placing your entry.
Additionally, there’s no automatic way to track your trades against the PDT rule, so you’ll need to monitor this manually.
Better Broker For Traders
For active traders looking for better options,
Charles Schwab is a great alternative to Wells Fargo. It offers virtual and futures trading, more product options, and advanced trading platforms.
Charles Schwab Website
Visit Schwab Website
Updated on 8/7/2024.
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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