Pattern Day Trader

Pattern Day Trader is an SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

Pattern Day Trader

Pattern Day Trader is an SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

 


Interpretation of Pattern Day Trader

A broker-dealer may designate a customer as a “pattern day trader” if it “knows or has a reasonable basis to believe” that a customer will engage in pattern day trading.  For example, if a customer’s broker-dealer provided day trading training to such customer before opening the account, the broker-dealer could designate that customer as a “pattern day trader.”



Under FINRA rules, customers who are deemed “pattern day traders” must have at least $25,000 in their accounts and can only trade in margin accounts.  For more information on pattern day traders and related FINRA margin rules, please read the SEC staff’s investor bulletin “Margin Rules for Day Trading.”


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