The account can continue to Day Trade freely. What if an account is Flagged and the account equity is above $25,000? To avoid an account restriction, pattern day-trader accounts that fall below the $25,000 minimum equity requirement should not day trade. Also, funds held in the Futures or Forex sub-accounts do not apply to day trading equity. Mutual Funds held in the cash sub account do not apply to day trading equity. Day trade equity consists of marginable, non-marginable positions, and cash. The $25,000 account-value minimum is a start-of-day value, calculated using the previous trading day's closing prices on positions held overnight. What if an account is Flagged as a Pattern Day Trader?Ī pattern day trader's account must maintain a day trading minimum equity of $25,000 on any day on which day trading occurs. So, an account can make up to three Day Trades in any five business day period without consequence but if a fourth (or more) are executed the account is designated (“Flagged”) as a Pattern Day Trader. Just purchasing a security, without selling it later that same day, would not be considered a Day Trade.įINRA provides that a Pattern Day Trader (“PDT”) is any margin account that executes four or more Day Trades within any rolling five business day period. This definition encompasses any security, including options. The Pattern Day Trading rules were enacted by FINRA to require that minimum levels of equity be deposited and maintained in Day Trading accounts.įINRA rules define a Day Trade as the purchase and sale, or the sale and purchase, of the same security on the same day (regular and extended hours) in a margin account.
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