Lottery Vs Day-Trader Pattern Rule | Podcast Episode #70

0:00
Hey, everybody, this is Ryan Mallory doing another episode of Swing Trading the Stock Market podcast. What do we have to talk about today? Well, I’ll back us up a little bit to last week. I was talking to my brother on the phone and we were talking about the commission free stuff, right? All these brokerages that are offering $0 commissions. It’s awesome. I like it. Um, in fact, today, I, I accidentally, I was putting in an order in for a stock. And I wasn’t ready to get into it yet, but I, I think I hit a market order instead of, no, I hit a limit order instead of a stop order and it immediately took because, um, what I was looking to short the price, the price was already above it.

0:16
So. The it was already above the limit order, so I got into it and I was just ah, whatever, you know, before I would always get irritated, not because it’s a ton of money, but I just hate blowing blowing money on freaking commissions. Um, it just seems like a, it’s like like real estate fees, right? or um. Title fees or. Paying for something that you just paying for toilet paper, right? I mean, who, who likes to spend 10 bucks on toilet paper, but it’s something that you have to do, it’s something that’s necessary, you know, but I. In order to trade, you got to pay commission fees.

1:01
Now that it’s zero, it’s great. So this trade that I accidentally got into, I, I basically just got right in, right out, no harm, no foul. I think I even made a buck 30 or something off of that or a buck. I don’t know, it was, it was something, it wasn’t much. It was, I thought, I think it was pretty much I got in and got out at the same price, but there was like some fractional differences on the, on the price of the stock where I got out. So it wasn’t bad. I, uh, I got a couple bucks out of it. So, so that’s nice too. So you’re not, I didn’t, I didn’t waste $8 because of a stupid or $15 because of a stupid uh mistake that I made. I actually profited from the er of my ways.

1:37
So, any case, What I want to talk about today is, is the lottery versus. Day trading and I’m more specifically pattern day trading. Like I said, I was talking to my brother last week. I was sitting at the bar and I was uh. Having a drink and he called me, so kind of rudely. I guess it’s not probably appropriate to take a phone call at a bar, but I talk soft. I’m not like one of those people who talks super loud at a, at a bar and let everybody know what their conversations about. I cover my mouth. I, I kind of speak loud. I don’t have to hear myself in order to know that the other person can hear me.

2:14
So I I have the conversation. I’m being respectful with those around me. And we were talking about the commissions and he was like, so is everybody gone commission free? I was like, yeah, and I said, the crazy thing is is that. With everybody going commission free, why do we have the day trading pattern rule? Now this isn’t something that affects me directly or at all. It doesn’t, but it affects a lot of people because trust me, I get a lot of emails from people saying, hey, I like to be part of the Trading Block, but I’m afraid if I get into one of your trades, you know, with, with $1000 on the trade that I’m not gonna make anything.

3:06
Because I’m just going to get it devoured by commissions. Now that would be true, but with commission free trading, it’s not true anymore. Yeah, you’re, you make 3% on a trade on $1000 you’re only making, uh, $30 but it’s a start, and that’s what getting rid of the commissions do, does is it gives you a start. So why, I can almost understand why they would say, if you have less than $25,000 you can’t day trade more than twice in a week before you’ll be flagged as a pattern day trader. Three times you’ll be flagged. OK, I get it, but really in the end, it’s not the government’s job to tell us what to do with our money. We talk about don’t tell us what to do with our bodies, don’t tell us what to uh eat, don’t tell us what to spend our money on. Don’t tell us what to do for medical care. But then on this whole financial front because there’s not a ton of people that are day traders, so that doesn’t affect a huge part of the population.

4:00
But I guarantee you, if there was a lot of day traders in America, there was like millions upon millions of day traders, yeah, this would become an issue. People would be pissed off that the government’s telling them how many trades they can make just because they have below $25,000. So how this rule is still even in effect. It is beyond me because it doesn’t make sense because if you have $25,000 technically you can day trade. You’re not gonna be able to make a living off of it, but you can day trade. And I’m not even, I’m not using this podcast to say whether or not day trading is right for you or, or whatever. I’m just, we’re talking in theory here. Day trading can be done with a $25,000 account. It can be done with a $5000 account now. You’re not gonna, again, you’re not gonna make a living off of it. You’re not gonna be able to eat much off of it, but technically, you can open up a margin account, $5000 Think or swim, Tasty Works, ETrade, Schwab, Fidelity.

4:55
And, and you can make a buck or two, you know, off of a $5000. So if you put $2500 on a trade and you make 5% off of it, right? I get it. You’re, you’re not making, you’re not making a lot. Uh, you’re making like 10 bucks, OK. But all I’m trying to say is, is that the commissions aren’t gonna eat it up. So it is $10 that you’re making. It’s a start, just like anybody who gets started investing, and they probably get started investing, they may only be putting a couple $100 towards it, you know, in their 401k or something else, and they’re just gradually adding to it every, every month. So there’s no reason for the government to have a patterned day trading rule anymore, absolutely zero. But the government likes to think that they know what’s best for you. They think that despite their horrendous ability to manage their own money. This is a government that gets $3.6 trillion of revenue from people in the United States and corporations in the United States every year, or this year at least, OK, last year it was a little bit less.

6:15
They’re getting record revenue. They’re still running a deficit that’s projected to be $1.1 trillion and it doesn’t matter if it’s Republican or Democrat, every one of these stinking presidents, they will run up a freaking deficit like nobody’s business. Every president spends more than all the previous presidents combined every time. And they all run saying we’re gonna get federal spending under control, but then they’ve introduced a litany of new programs. They look, the Defense Department doesn’t need to be spent. I worked in the defense department, right? I remember being told when I worked, I, I’m sorry, I did not work for a defense department. I worked for a defense contractor. I remember when I was working for that defense contractor, and it was a very, very big defense contractor. And this was before I went full time as a trader. They told me. If you go to the bathroom, charge the government for it. You better piss on the government’s time. That’s what they would tell me to do. Don’t charge the corporation.

7:16
You do that on government time. In fact, if you weren’t charging the government for, for, for time, let’s say you, you took a Uh, uh, you were talking to your boss about your job. You couldn’t charge that to overhead. They wanted you to charge it to a program. Every time it, it’s like the legal industry. I mean, they’re working and they’re charging somebody. All the time, every time, billable hours, that’s what the defense contractors want. They want billable hours. And so the you got the defense industry, you got entitlements, you got all the stuff. It’s stuff that’s the The prized possessions of the Republicans, prized possessions of the Democrats, they’re not gonna ever cut their spending, OK? You gotta get like a libertarian or somebody who just doesn’t, doesn’t give a rip about what, what everybody thinks and, and has some kind of incredible mandate to go in and just clean the books because Everybody’s feeding at the trough. So, I’m getting really derailed on this podcast, but bear with me here because some of it does, does, uh, come together here.

8:00
The reason why I bring up all the federal spending and the and, and how, you know, the fact that it’s hypocritical for them to tell us how to spend our money, you know, if, particularly for those who are pattern day traders or not pattern day traders, you can’t really become a pattern day trader. If you make less than $25,000 if you do, then you’re gonna be flagged. But if you’re under $25,000 you’re technically not allowed to day trade and they, they wanna keep you from doing that and that’s wrong. It really is wrong. But here’s where it gets even crazier. Is the lottery system. This is like the height of hypocrisy. This is hypocrisy at its finest. The government tries to say you cannot day trade because we worry about you losing your money or we care about how you spend your money and and and everything. There’s no meaningful reason for The government to act like they care about how we spend our money. And here’s the, here’s the thing, and actually, I misspoke earlier.

9:06
I said it was um you can’t do more than two trades within it. It’s actually if you do Uh 4 trades. Or more during a 5 business day time period. You will be flagged as a pattern day trader, and basically what they do is they tell you that. You you can no longer close out any trades until the the. Until the following day. That’s kind of messed up. I mean, you’re actually this whole this whole rule was created to discourage day trading. And and and to discourage investors from taking on excessive risk. What, what is more risky, doing a day trade that closes, closes out the same day or holding a stock overnight? It, it blows my mind. It makes no sense. But here you have the the the lottery, and I’m, I live in Florida, and here in Florida we’ve had the lottery for as long as I can remember. I mean, I was a kid and I remember and and the the who the lottery attracts the most are the people who are desperate and destitute, low income people who are living in poverty, they are living on the street.

10:05
That doesn’t mean that that people Who have money, middle class or upper class that they don’t play the lottery either, but it’s more for entertainment purposes. They’re not playing it For The hopes of becoming rich one day or hoping, man, if I could just win the lottery, man, I will, I will be able to lift myself out of poverty. No, they’re doing it for entertainment purposes. They enjoy the effects of a scratch off in the hopes of winning, OK? But this is the government that’s putting this in place. It’s a tax on the poor. It’s the poor that are getting trampled on by the government because the government says, well, we’re doing it for education and because of the lottery, we’re gonna be able to put more money towards education. No, you’re riding on the backs of the poor because you believe that they’re gullible enough or you’re trying to take advantage of them in their state of hardship by giving them this hope, this hope that does not exist. That they could possibly win the lottery.

11:12
I mean, what is the odds of winning the lottery, you know? It’s like 1 in a billion. I don’t know, that might even be a conservative estimate for all I know. But you, dude, it is, it is so asinine. For the government to to sell the the lottery system as oh well we’re helping with education and everything. So basically the, the taxpayer money that they do get that could go to education, they can put it towards something else. And Florida, they don’t really put that much money towards education, if any at all, it all comes from the lottery. And so who’s paying for it all? Well, we, we have property taxes here, we have sales taxes and all that stuff and, you know, parts or all of it goes to. The education to certain some some extent, right? But then, but that’s not enough. We gotta go do the lottery system, OK? And we gotta figure out another way to collect.

12:07
So the, these, these people, these poor people, the low income, the people in poverty who can’t afford it, they’re being suckered into doing this lottery. Now, I get it. I don’t feel bad for people who play the lottery, OK? Because Just because you’re in a low income situation or you’re in poverty doesn’t mean that you don’t have common sense. You absolutely do, and you can think for yourself. So you shouldn’t be playing the lottery. At least beyond entertainment purposes, I get it, but there’s, there’s lottery tickets. I, I can’t remember the last time I was in a Publix, I think I saw some lottery tickets. They were going for Um. Like anywhere from like $1 to $2 they had stuff that was like, like $10 I think. I mean some crazy amounts and people were buying this stuff for the hopes and dreams so that they can be financially well to do.

12:43
I mean, it’s just crazy. So we have the government that says you can’t do pattern day trading because they care about you not taking on excessive amounts of risk. But then on the other hand, they’re like saying screw it. If you’re poor, we’re going to uh set up a system that is hard for you to resist, that gives you us more of your money so that you have to rely on us even more because you’re gonna have even less money than what you had before. Welcome to the lottery. Welcome to Powerball, where you can achieve your hopes and dreams by winning the lottery. But let’s be honest, nobody’s gonna actually win it except for one person a week out of the entire country. And if that, that’s if you’re lucky. Most of the time these things roll over and roll over and roll over and they just get bigger and bigger and you get into the billions of dollars which attracts even more people to put more money on there because they all of a sudden think that they’re gonna be wining and dining with Jeff Bezos if they win the darn thing.

13:38
It is absolutely mind blowing that we have a day trading pattern rule, and yet what is more risky and what is less achievable is a success in the lottery, and that’s government sanctioned. It’s government run, and yet day trading pattern rule prevents people from doing what they want with their own money. You have. The possibility of becoming a billionaire from day trading with $5000 or let’s say just $25,000. You have a better chance of becoming a billionaire with just $25,000 in your account and day trading for the rest of your life than winning the Florida lottery. In fact, I would say you’re probably more likely to get $10 billion than when the when I keep saying the Florida lottery cause that’s what they call it down here, but winning any lottery, whether you’re in Pennsylvania, Ohio, Florida, Georgia, doesn’t matter. It’s the whole thing’s a sham, and they’re just banking major dollars off of people who are the most desperate for it, because I tell you, I don’t think Mark Zuckerberg is running to the Piggly Wiggly or to Wawas tonight to go get a Powerball ticket.

14:44
It just isn’t happening. So in any case, that’s gonna be my podcast. What, what do I think the takeaway should be for? I know there’s not much talk about. Actual trading strategies and everything else, but I really thought this was a cool topic that I talked to my brother about last week and I wanted to, uh, share it with you guys. He does much more important things than me. I don’t even know what he does, but he does trade and, and he does seem to do a decent job. I, I got to get him to use stop losses a little bit more than what he does. Um, sometimes he lets those trades turn into long term investments, which he knows that he should not do. But the takeaway, um. I don’t know, man, just because the government says it’s good for you, I guess it’s not. Uh, that, that, that’s gonna be it today.

15:19
If you have any questions, feel free to email me. Check out the new Trading Block. It’s really cool. I sent an email out if you’re on the email list. Definitely check it out. There’s 3 tiers. There’s a starter elite and VIP package. I’d encourage you to take a good hard look at these and, uh, jump in the Trading Block with me, man. I’m in there every day from the time the market opens to the time it closes, and, uh, we’ll have it, love to have you there. Thank you. God bless.