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Ive been flagged a pattern day trader, I have questions about switching brokers.

post #1 of 7
6/3/12 at 10:27pm
Thread Starter 

Because of wash sales Im thinking about just waiting 31 days from my last trade so that my new broker will have the correct amounts in the gain loss section. The other thing I was thinking about is could my account just be transfered over to a new broker and then when I buy a stock the wash sale would automatically be shown in the gain loss section?

 

Ive already told scottrade I had made a mistake by modifing an existing order and wasnt aware that it would be counted as 2 day trades. Now I know. They dont care about losing me as a customer and my account is still frozen.

 

If i did a transfer to the new broker would the pattern day trader status be transfered as well?

 

Another option is to just sign up for a new broker and not mention the pattern day trader status, but I would probably want to wait 31 days for my wash sales to be done with so their gain loss section would be correct.

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post #2 of 7
6/3/12 at 11:56pm

nate I'm pretty sure at least 5 people answered your question in the weekly thread, but 

 

1) No the status will not be transferred 

2) There is no punishment

3) If you used some free trades promotion with Scottrade then you will have to reimburse them for those fees

4) Why do you need the wash sale in there so badly anyways?

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post #3 of 7
6/4/12 at 7:11am

Your account if frozen would be for buys only. You can either transfer or sell. PDT does not follow you around and the wash rule means zip to a small trader.

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post #4 of 7
6/4/12 at 2:47pm
Thread Starter 

wash sale does matter. If i go to etrade then they will calculate my cost basis without knowing I have previously bought apple in the past 30 days.

 

I think the safest thing to do is to take out all my money from scottrade tomorrow when my trades settle, then open up a etrade account and start trading 31 days from my last trade was placed.

 

Im surprised that scottrade refuses to let me have a pass on this PDT thing I explained how I made the mistake and that it wouldnt happen again, but they dont care.

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post #5 of 7
6/4/12 at 3:26pm
Thread Starter 

i just talked to scottrade and they are converting me to a cash account tomorrow and after 90 days they will automatically convert me back to a margin account.

 

I have been wanting to get off margin as its very risky so I figure ill probably just stay with scottrade im still not happy about it.

 

I dont really understand how cash accounts work so it looks like I have some reading to do.

 

I did explain how I made the mistake but he said there is nothing he can do.

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post #6 of 7
6/4/12 at 8:38pm

To some extent I don't see why you needed to make another thread after your questions been answered multiple times by multiple people. You essentially asked what you should do, and you were given pretty clear and precise instructions on what you can do. Instead you're doing the opposite and arguing in circles. If you are concern about taxes then you need to hire a real CPA, you DO NOT need your p/l transferred over to a new account because you WILL be filing a Form 8949 that will list ALL of your transaction. 

 

A cash account works as such: all stocks traded are subjected to a 3 business day settlement meaning after you sell a stock you will be required to wait 3 days before you are allowed to make another full round transaction. In most cases you are allowed to make an entry with unsettled funds, but you will not be able to sell it until your funds are settle. Options on the other hand settles overnight. In a cash account you are also not allowed to short. 

 

I believe you made the same mistake many new traders make, not understanding the rules of a cash account and simply opening a margins account. Moreover, you don't have to explain to Scottrade why you made the mistakes, all Reg-T issued onto your are final for most brokers. 

 

Finally as Bobk said, wash sale means very little to you because you're operating on a small account the difference in most cases are negligible. Any CPA will take care of that for you, given you provide them a list of all your transaction provided by most brokers anywhere.

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post #7 of 7
6/4/12 at 8:49pm

lol all the same questions which were already answered before.

 

Heres theres the simple version:

 

Will restrictions transfer to another broker:

NO or if your that concerned put the money into your bank and then transfer. Its a PER acct flag not a per name of the person unless habitual as explained.

 

Get a CPA : YES

PL transferred: Not applicable as you will received reports from both houses which are combined by you or your CPA. (its best to be cash if your doing a house to house xfer i think)

Wash Sales: Applicable on stock but not options (depending on point of view).. you are not specific where that potential wash came from

 

 

Cash account: Will is correct.


Edited by mjoke - 6/4/12 at 9:13pm
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