So, the PDT rule is going away on June 4.
I’m very excited about this (it’s been going on for 20+ years).
But I’m also a little concerned for anyone who’s not prepared.
When the PDT rule started in 2001, it was after I’d made the majority of my first big wins.
So, I was WAY over the $25,000 minimum balance.
When it first came in, I hated it…
“This is un-American. Screw the SEC. This sucks.”
But as I got further into my teaching career, my opinion changed…
“This is good. You need to protect the newbies from themselves. If they just trade all day, they’re going to lose.”
The reality is…
It doesn’t matter what you or I think. The PDT rule is going away.
What does this mean and why should you prepare now?
Penny Stock Mania Is Coming
If you’re trading with an account under $25,000, you are going to have a LOT more freedom to trade however you want.
But like Spider-Man teaches…
With great power comes great responsibility.
I don’t think many people with less than $25,000 understand this…
Quality beats quantity in trading.
I think a lot of unprepared traders are going to churn and burn their accounts faster than ever before.
In fact, I think a lot of them are going to miss the PDT rule.
They’ll be saying, “I used to be protected from myself.”
My business as a teacher is going to boom because a lot of newbies who didn’t think it was important to invest in their education are going to lose more.
Is that you? If so, NOW is the time to invest in education.
You only have two weeks to prepare. 13 days from today. That’s not much.
To put things in context…
Compared to when the PDT rule first came into effect, the opportunity to trade has already expanded FAR beyond what any single trader can handle.
How so?
Trading Windows Are Never Closed
You can literally trade 24/7 if you want (I’m NOT suggesting you do).
I’m already trying to get students to stop overtrading (like me).
But if you think about it…
When I started, we traded the first 90 minutes and the last hour of the day.
Now?
There’s premarket trading from 4 a.m. ET on.
Even though most brokers put restrictions on trading before 7 a.m., you can get the restrictions lifted.
Then there’s after-hours trading.
And some brokers allow you to trade with other people using the same broker 24-hours a day.
If you’re into crypto, you can trade 24 hours a day, 7 days a week, 365 days a year…
As if that isn’t crazy enough, when there’s no more PDT rule…
It’s going to be pandemonium.
I think it’s going to open the floodgates up, specifically to penny stocks, micro-caps and small-caps.
Get ready for a wild summer.
There’s an old proverb: Fortune favors the bold.
In two weeks, when the PDT rule is gone…
Fortune favors the prepared.
So let’s go over some risk management strategies to help you get started…
The 10-5 Rule: A Simple & Effective Strategy
Learning how to use risk management when you trade can be tough at first, but that’s why I’m here — to help you.
One of the biggest mistakes traders make?
Taking positions that are too large.
Oversized trades amplify emotions and increase the risk of significant drawdowns.
To combat this, I recommend using my 10-5 Rule for position sizing and stop losses…
✅ Risk no more than 10% of your total trading capital per trade.
✅ Set a stop loss 5% below your entry price.
Example: If you have a $10,000 trading account, the 10-5 Rule means:
• Each position is $1,000 (10% of your capital).
• Stop loss is set 5% below your entry price.
• If the trade hits your stop, your maximum loss is $50 per trade (just 0.5% of your total account).
By following this consistently, you’re limiting your risk to only 0.5% of your total capital per trade, ensuring that one bad trade won’t blow up your account.
For traders who can handle higher risk, an alternative is the 10-10 Rule: Same 10% position size per trade. Stop loss set 10% below entry. Max loss per trade = 1% of total account balance.
By sticking to these principles, you protect your account, control losses and put yourself in the best position for long-term success.
Smart traders survive the game by managing risk first — profits will follow.
One of the most important rules in trading is to always ensure your potential reward outweighs your risk.
The key to achieving this is simple:
✅ Always set a stop loss.
✅ Always have a clear price target before entering a trade.
If you have any questions, email me at SykesDaily@BanyanHill.com.
Cheers,
Tim Sykes
Editor, Tim Sykes Daily
