Stocks & Commodities V. 24:7 (22-30): Is Overnight Trading A New Way To Daytrade? by Thomas K. Carr, Ph.D.
Is the pattern daytrading regulation an obstacle to your daytrading? There may be a way around it.
On September 28, 2001, the Securities and Exchange Commission (SEC) imposed pattern daytrading regulations on all trading accounts less than $25,000. These new rules prohibited undercapitalized traders from daytrading more than twice in any given five-day period. But “necessity is the mother of invention,” so I set to work on finding a way to skirt the SEC rules. It was then I came up with the idea of “OverNightTrading” (ONT).
WHAT IS ONT?
It is essential to think of ONT as a form of daytrading.
Daytrading is a type of short-term trading where positions are taken in liquid, volatile stocks making
sizable moves on an intraday basis, and are held from
several minutes to several hours, but in no case is a
daytrade position held overnight. ONT is daytrading,
but with that last qualification removed.
In ONT, you establish a position in a stock shortly before the close, and then after holding the position
overnight (hence the name), close it the next trading
day. An ONT is a trade that takes a position in a stock
with a high probability of making a sizable move during any or all of three distinct periods...