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+--- Thread: Stock Legalities/Requirements (information) (/showthread.php?tid=5183726)
Stock Legalities/Requirements (information) - thales - Feb 25, 2016
Just thought I'd share some information for stocks when it comes to what's legal and what's not + requirements. THIS IS US ONLY.
Day trading: Defined as someone who makes 4+ trades within a week (5 day business week) is considered a pattern day trader.
Requirements for this: You are required legally to have an account balance of at least $25,000 to do this.
Does not apply to Forex trading
Stock advice: It is ILLEGAL to offer PAID stock advice (fee or flat amount) without specific licenses and applications filled out.
Requirements: https://www.sec.gov/about/laws/iaa40.pdf (read more here)
Margin Accounts: By law MUST have a minimum balance of $2,000.
Requirements: $2,000 to open a margin account.
Will add more if requested.
* - vexius - Feb 25, 2016
Should be said that these rules only apply to US citizens, and the first one doesn't apply to forex trading
However, thanks for posting :)
* - thales - Feb 25, 2016
(Feb 25, 2016 04:05 PM)vexius Wrote: Should be said that these rules only apply to US citizens, and the first one doesn't apply to forex tradingI'll add those in, thanks =)
However, thanks for posting :)
* - Kіng - Feb 25, 2016
(Feb 25, 2016 03:53 PM)thales Wrote: Just thought I'd share some information for stocks when it comes to what's legal and what's not + requirements. THIS IS US ONLY.
Day trading: Defined as someone who makes 4+ trades within a week (5 day business week) is considered a pattern day trader.
Requirements for this: You are required legally to have an account balance of at least $25,000 to do this.
Does not apply to Forex trading
Stock advice: It is ILLEGAL to offer PAID stock advice (fee or flat amount) without specific licenses and applications filled out.
Requirements: https://www.sec.gov/about/laws/iaa40.pdf (read more here)
Margin Accounts: By law MUST have a minimum balance of $2,000.
Requirements: $2,000 to open a margin account.
Will add more if requested.
I know you're mainly talking about US but this may be good to add for Canadian residents:
PDT rule does not apply to Canadians at all. No minimum to day trade and no time is needed for the funds to settle (meaning you can trade using $100 an infinite amount of times provided you don't lose and no commissions).
For the advice, you need a license and an entity backing you up in the case that you are held liable.
Margin accounts: I believe it is a minimum of $1000 (lowest I've ever seen on any Canadian broker).
* - Decade501 - Feb 25, 2016
Should post some tax requirements / limitations as well ;p
* - thales - Feb 25, 2016
(Feb 25, 2016 07:12 PM)Kіng Wrote: I know you're mainly talking about US but this may be good to add for Canadian residents:This is us stuff only 😝
PDT rule does not apply to Canadians at all. No minimum to day trade and no time is needed for the funds to settle (meaning you can trade using $100 an infinite amount of times provided you don't lose and no commissions).
For the advice, you need a license and an entity backing you up in the case that you are held liable.
Margin accounts: I believe it is a minimum of $1000 (lowest I've ever seen on any Canadian broker).