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New Post: Day Trader Rules and Tax Treatment - Article Highlights: Risky What is a Day Trade? Pattern Day Trader Equity Requirements Margin Trading Tax Implications Day Trading as a Business Day Trading Business Tax Issues Election Day trading is neither illegal nor unethical, but it can be highly risky. Most individual investors do not have the wealth, time, or temperament to make money or sustain the losses that day trading can bring. Day trading in securities is governed by the Securities and Exchange Commission (SEC) Regulation T. Different rules apply for day traders for tax purposes than for SEC governance. What is a “Day Trade”? Financial Industry Regulatory Authority (FINRA) rules define a day trade as the following: The purchasing and selling or the selling and purchasing of the same security on the same day in a margin account. This definition encompasses any security, including options. In addition, a day trade is considered as selling short and purchasing to cover the same security on the same day. Exceptions to this definition include the following: A long security position held overnight and sold the next day prior to any new purchase of the same security; or A short security position held overnight and purchased the next day prior to any new sale of the same security. Pattern Day Trader: If a broker-dealer designates a customer as a “pattern day trader,” FINRA margi...



