Reduce the Pattern Day Trade Minimum Equity Requirement to $10,000
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The current Pattern Day Trade (PDT) minimum equity requirement is the biggest barrier to entry for new and low-net-worth (LNW) traders trying to turn stock trading into a viable method of accumulating wealth.
The SEC believes that people whose account equity is less than $25,000 may represent less-sophisticated traders, who may be less able to handle the losses that may be associated with day trades.
This rationale is flawed for multiple reasons:
- With the advent of the internet, opportunities for education are now bountiful and most new traders actively seek out training and guidance before to trade
- An accounts equity amount does not directly correlate to a traders experience
- It's discriminatory against low-net-worth traders who may want to participate in day-trading but have little money to invest.
- The PDT rule actually creates more hazard for low-net-worth traders by limiting their day trades because they can potentially be locked into a position that they could otherwise close if there was no PDT restriction.
- U.S. citizens are put at a disadvantage from the rest of the world because other countries don't have to be compliant with these regulations - even though they're trading in our markets!
The average citizen in the United States does not have $25,000 to place in a brokerage account to achieve the PDT minimum equity requirement, and instead of "protecting" American citizens from potentially losing money it's creating inappropriate risk, barrier to entry and hindering the ability of the average citizen to invest their full potential and create wealth.
The reality is that there are much more low-net-worth citizens in the US that wish to enter the stock market and grow their wealth through investing, and this number will only increase with the improvement of mobile technology. For example, the brokerage Robinhood, which caters almost exclusively to entry-level investors has amassed nearly 2,000,000 users since their launch in 2013.
As our world evolves and the "gig-economy" becomes more prevalent where many people have multiple jobs it's more important than ever that the American citizen has the ability to invest and create wealth any way possible. The luxury of using the stock market to its full potential can no long be reserved for people that are fortunate enough to start with a large net worth.
To fix this problem and make the stock market more accessible to everyday citizens, this petition and its signers request a conversation to be started to lower the PDT minimum equity requirement to $10,000.
Reducing the PDT minimum equity requirement to $10,000 could have massive positive impact for LNW citizen traders, by:
- Making day trading more easily accessible
- Providing a safer environment by enabling traders to not get trapped in hazardous positions.
- Enabling more opportunities to make profit and build wealth
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