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Pattern Day Trading

Pattern day trading protection

Rachel avatar
Written by Rachel
Updated over a week ago

Intraday Trading or Day trading is described as the opening and closing of the same security (any security, including options) on the same day in a brokerage account.

The US Securities and Exchange Commission requires pattern day traders to have at least $25,000 in their trading account to buy and sell the same stock on the same day.

When you buy and sell the same stock, you've made a day trade. You are limited to no more than 3-day trades in a 5 trading day (business day) window unless you have $25,000 of portfolio value. For cryptocurrencies, there is no limit when trading.

An example of day trading: You have 0 shares in XYZ stock. You buy 1 share of XYZ and then sell 1 share on the same day. This is considered a day trade.

1 day trade 2 day trades

Sunday

Monday

Buy 1 Share of XYZ

Sell 1 Share of XYZ

Tuesday

Wednesday

Buy 2 shares of ABC

Sell 1 Share of ABC

Buy 1 Share of ABC

Sell 2 Shares of ABC

Thursday

Friday

Saturday


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