The PDT rule, in plain English
1In one sentence
In a US margin account under $25,000, making 4 or more day trades within 5 business days flags you as a pattern day trader.
A day trade is opening and closing the same position on the same day. It counts for stocks and for options.
2Try it: count a week of day trades
Pick an account type, then add day trades to each day and watch the result.
33 words to know
Day tradesame day
Buying and selling (or selling short and buying back) the same stock or option on the same day.
Pattern day trader4+ in 5 days
What your broker flags you as after 4 or more day trades within 5 business days in a margin account.
$25,000minimum
The account value a flagged pattern day trader must keep to keep day trading.
4Watch out
- Being flagged restricts you. Under $25,000, a flagged account usually can't day trade for 90 days, or until you add funds.
- Cash accounts work differently. No PDT flag, but you can only trade with settled cash. Stocks and options settle the next business day.
- Rules can change. FINRA has proposed changes to this rule. Your broker will tell you which rules apply to your account.
5Quick check · 3 questions · optional
Common questions
What is the pattern day trader rule?
A US brokerage rule: making 4 or more day trades within 5 business days in a margin account flags you as a pattern day trader, and you must keep at least $25,000 in the account to keep day trading.
Does the PDT rule apply to options?
Yes. Opening and closing the same option position on the same day counts as a day trade, just like stocks.
How do I avoid the PDT rule?
Keep day trades to 3 or fewer in any 5 business days, hold positions overnight, keep $25,000 or more in a margin account, or use a cash account and trade only with settled cash.
Education only. Examples use illustrative numbers. Not financial advice; you make your own decisions.