Wondering what pattern day trading is?

Wondering what pattern day trading is? In U.S. stock and options markets, the Pattern Day Trader (PDT) designation applies when you place four or more day trades within five business days in a margin account, and those day trades are more than six percent of your total trades in that period. Regulators require a minimum of $25,000 in account equity to continue day trading once flagged. A day trade means opening and closing the same security on the same day, including round trips in options. The rule exists to limit excessive risk and ensure traders have sufficient capital for rapid, intraday activity. If you do not meet the equity requirement, your broker may restrict your account for up to 90 days or limit your day-trading buying power. You can stay compliant by keeping day trades under the threshold, holding positions overnight, using a cash account and waiting for T+1 settlement, or increasing your account balance. Understanding what counts as a day trade, how the five-day window works, and the potential consequences helps you plan a sustainable approach to active trading.

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