I am currently investing with the Robinhood app and have been doing fairly well with day trades two to three days a week. However, I find myself in a new scenario this morning where I don't know if my actions will be counted as a single day trade, or two day trades.
As you probably already know, a day trade is defined as:
Two transactions in the same instrument in the same trading day, the buying and consequent selling of a stock, for example.
Which also means that selling a stock and then re-buying the same stock also meets these requirements and thus is counted as a day trade.
For example, last night I bought 100 shares of ticker RBZ, and this morning I sold 100 shares of RBZ. This is not currently a day trade since I bought and sold on different days. However, part of my strategy for this ticker is to wait for it to slide 30% down until near market close, and watch for an evening climb.
If it begins rapidly climbing, I plan to buy back in at 100 shares which now, from my understanding, marks my activity today for RBZ as a day trade. After watching it climb a bit more after buying in, I'll want to sell either just before market close, or right as after-hours begins so that I don't lose profit overnight.
At that point, if I sell my position, is it constituted as a second day trade, or mingled in with the first, or just a normal trade?
- Planned Flow for Today:
- Sell entire position on RBZ.
- Buy new position on RBZ. <- Constitutes one day trade.
- Sell entire position on RBZ. <- What is this considered?
My reason for concern is that by the PDT rule, I can only utilize three day trades a week with Robinhood, and I've already used two for the week which means I only have one left. I'm afraid that if I buy back in on RBZ tonight, that I won't be able to sell back out before tomorrow.