According to regulation, you would be considered a pattern day trader if you execute four or more day-trades within 5 business days in a margin account. If you are designated as a pattern day trader, you are required to maintain a minimum account value, inclusive of margin loans, of $25,000. If your account value drops below $25,000, your account may face further restrictions (see PDT calls).
What is a day trade?
A day trade occurs when you buy and sell the same symbol in a margin account on the same day. If you execute more than 1 day trade within 5 business days, you’ll see a warning before placing the trade to remind you how many day trades you’ve placed.
| Scenario | Number of Day Trades |
|
Day 1: Buy 100 ABC Day 2: Sell 100 ABC |
0 |
| Day 1: Buy 100 ABC, Sell 100 ABC | 1 |
| Day 1: Buy 100 ABC, Sell 50 ABC | 1 |
| Day 1: Buy 100 ABC, Sell 50 ABC, Buy 50 ABC, Sell 50 ABC | 2 |
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