Pattern day trader rule.

In plain English

The pattern day trader rule is a FINRA margin rule that applies once an account makes four or more same-day round-trip trades within five business days. It also requires that those day trades make up more than a set share of total trading in that window, with the current threshold published by FINRA. Once flagged, the account must maintain a minimum equity level before it can keep day trading, and the current figure comes from FINRA directly. If equity falls below that level, the account can be restricted until it is restored. The rule applies to margin accounts, and firms may apply stricter standards of their own.

01Why it matters

Being flagged changes what your account can do, and an unexpected restriction can leave you unable to close a position on the schedule you planned.

02The math, step by step

Say you buy and sell the same stock on Monday, again on Tuesday, and twice on Thursday. That is four day trades inside five business days. In a margin account, that pattern is what triggers the designation, regardless of whether the trades made money.

Illustrative example. The amounts here are hypothetical, chosen to show how the math works, not real quoted rates or figures.

03What this is NOT

04Receipts

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