I just started testing some strategies with the API today in paper. During after hours trading, I bought shares of two different stocks. Once the orders were filled, I immediately set up two OCO orders to sell everything at certain price points. My day trade counter is now at 2. I understand that these are only “potential” day trades since the sales haven’t actually happened. However, I’m still confused as to why they’re even considered potential day trades. My OCO orders have “Extended Hours” set to “No”. So even though the OCO order was placed in the same day, it shouldn’t be able to execute until tomorrow because regular trading has already ended for the day. That wouldn’t be a day trade as far as I understand.
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@Dan_Whitnable_Alpaca I have also experienced this.
My case was 3 bracket orders placed on the same day being counted as 3 day trades, with a 4th trade being denied:
“trade denied due to pattern day trading protection”
even though the limit and stop loss legs of the bracket order have not been filled (they have new and held status), so i don’t think these should have counted as day trades.
I am using a paper account.
Would you be able to add some clarification? Many thanks.
@rory @Scn64 The ‘Pattern Day Trade’ protections which Alpaca have in place are meant to keep a trader from exceeding 3 day trades in a rolling 5 day window. Why? If an account exceeds 3 day trades in 5 days it will be designated ‘Pattern Day Trader’ or PDT. This is an SEC regulation. Being designated a PDT is really neither a good thing or a bad thing. Being designated a PDT is good in that it provides increased intra-day buying power up to 4x equity. However, one bad thing is one must maintain $25,000 equity in the account. If the equity drops below that amount, the account is restricted to liquidation only (ie it cannot open any new positions) until the account equity is brought above $25,000.
So, if one doesn’t have $25,000 equity this is a bad thing. One effectively cannot trade. This is why Alpaca tries hard to keep accounts from ‘accidentally’ making more than 3 day trades in a 5 day window.
The OCO orders being placed after hours probably shouldn’t be counted as ‘potential day trades’. The underlying logic however, doesn’t look at the time in force. I’ll highlight this issue with our development team. The workaround of course is to place the OCO orders the next day. This could be done before markets open. The PDT protections won’t block that.
Submitting a 4th bracket order after 3 have already been placed will definitely trigger a PDT protection and be rejected. Why? All 4 orders could execute the same day. Each of the 4 parent orders could open a position and then a leg of each of the orders could close it. This would be 4 day trades and the account would immediately be blocked from trading until equity went above $25,000. While each of the 4 bracket orders probably wouldn’t fill there is a chance they will. That is why they are ‘potential day trades’ and why the 4th one is rejected.
Does that make sense?
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Yes that makes sense, thanks for the reply Dan.