Top No PDT rule Brokers/Options for Traders

While I’m sure the SEC has good intentions, the PDT rule or “pattern day trading” rule has affected many in a negative way.

What is the PDT rule? This stipulates that an investor simply cannot actively day trade with less than $25,000 in equity within their account – at least not over three times per week. To be honest, PDT rule trading is one of the most frustrating hurdles a new trader must face.

How to avoid the PDT rule?

Considering no PDT rule brokers are hard to find, let’s review my top three options for traders looking to actively day trade stocks.

PDT Rule & Cash Accounts

While traders may be discouraged by PDT trading rule, if they only keep cash in their account most brokers will allow them to day trade as much as they want.

The catch? They still must follow the T-2 rule. This rule makes it so that your trading broker must allow two days to pass after each trade for your funds to be credited back into your account.

For example, if you buy 1,000 shares of a $1 stock, you are spending a total of $1,000 in that trade. Per the T-2 rule, you must wait two days to get that back, plus or minus any gains or losses.

As you can probably see, this affects small account much more. Accounts with larger equity may not even notice, depending on the price range of stocks traded. Another considering factor is the lack of shorting ability. Since you need margin accounts to short on almost all regulated brokers, this option is reserved almost exclusively to long traders.

Pros:

  • Ability to day trade on most regulated brokers

Cons:

  • T-2 Rule severely limits small accounts, No shorting

Overseas Brokers

To put things into perspective, the PDT rule is only enforced on brokers regulated by the SEC/United States. Some brokers operate outside those restrictions and so thus can bypass the PDT rule. The problem with many of these is that they have leverage over new traders.

You could also try a UStockTrade PDT rule bypass as well, but the platform is minimalistic. Other options for new traders are slim and so they can consequently charge ridiculous platform fees, commissions, etc. and take advantage of their current situation.

Having gone this route before, I can attest to how quickly things add up. After going through this, my advice is to search for the cheapest option when you first start your trading journey. Do not let impatience cause you to lose money. I did and I regret the route I chose…

Pros:

  • Ability to day trade
  • No T-2 rule on many,
  • Ability to short

Cons:

  • FEES, FEES, FEES…

CFD Trading

CFD stands for “contract for difference” and basically mirrors live trading. Instead of trading the actual security, you are instead trading the contract for it. This ends up giving you roughly the same result most of the time, but subsequently allows you to day trade without following the PDT. Aside from that, the commissions are pretty cheap relative to other brokers, and the platforms are almost identical.

You could also consider prop-firms, although you would have to dig around to find quality options. These are firms that take traders in, supply them leverage, and take a cut of the profits they make. This can be a great option as well as many offer comparably cheap commissions and great platforms. Again, the biggest considering factor with prop firms is finding a good one. Like most in the trading world, the abundance is there, the quality not so much.

Tradenet PDT Rule Loophole

Now, maybe I am biased here, but CFD Trading on Tradenet has been a blessing. It is very similar to a prop-firm structure and I was able to trade a decent sized account for cheap. The Intro Package came with $14,000 in buying power to trade with, which in retrospect was plenty.

The best part? NO PDT rule! I was actually able to day trade as much as I wanted, and my funds were settled back into my account immediately. To top it off, the platform was only $15 per month and when using less than 300 shares to trade, my commission for a full round trip was only around five bucks! Plus, new traders can short when trading CFDs without having to locate them or pay extra.

While that may seem like a minor benefit, this shorting ability is honestly a huge edge and can help new traders really start to grasp what short selling is.

As I said earlier, the platform I use to trade CFDs is Tradenet. You can get 20%-30% off funded account packages by going through this LINK.

Pros:

  1. No PDT Rule
  2. Cheap Commissions on many
  3. No T-2 Rule
  4. Decent platform and fills

Cons:

Profit split, Trades don’t influence the market

Final Thoughts…

Again, options for new traders are slim. Still, as I have matured as a trader and paid my dues in the market, I have started to slightly understand why it is there. Newbies can really lack any type of risk management and discipline. Losses can add up quick and fortunes can be lost within minutes. Sometimes having a limiting rule like the PDT can be a blessing disguised as a frustration. As with most things, opinions are subjective.

More options on how to avoid PDT rule?

Resources:

To learn more about the top No PDT rule brokers/best broker with no PDT rule for stocks, check out this video.

To listen to my review of Tradenet, you can watch this.

To see what CFD trading looks like live, you can also watch me day trade live on stream via YouTube. I go live every weekday and trade the open for all to see. The stream starts at 8:15am EST and you can click the bell next to my subscribe button to be notified each time I go live or post a video. Click here to check that out!

Beginner Trading John

Beginner Trading John

Trading Mentor, founder of Beginner Trading, financial blog writer. Love to share my trading experience with aspiring traders. More info at https://beginnertrading.net

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