When stock trading, I understand that there are limits to the number of trades one can make with respect to a single company's stock within a certain time period. Can anyone confirm or provide any details?
I believe you read this restriction from a US brokerage.
"Day Trading Restrictions on US Stocks"
By Adam Milton, About.com
The SEC (the US securities and exchange commission) has placed restrictions on the day trading of US stock markets. US stocks can only be day traded if the trader has deposited a minimum of $ 25000 in their trading account, which is not the case for most beginning day traders. Beginning day traders can still trade US stocks, but the positions will need to be kept open for longer than usual (at least overnight).
The SEC considers a day trade to be any trade that is opened and closed within the same trading day, and considers a day trader to be any trader that completes 4 or more day trades within 5 business days. If a trader is classified as a day trader by the SEC, but does not have the required $ 25000 in their trading account, their account will be frozen for 90 days.
Initially, these restrictions may appear to prevent day trading completely, but this is not the case, as these restrictions only apply to the US stock markets, and not to either the futures or currency markets.
In 2008, the newly created Investment Industry Regulatory Organization of Canada (a.k.a. IIROC which combined IDA and Market Regulation Services) adopted these rules and now waiting for the securities commissions for approval. (as of May 2009 update)
Currently, I understand that only Interactivebrokers Canada abides by PDT rule as it clears its "security exchange trades" in US. (**proprietary trading firms are different matter)
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