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Learn/Day trading
beginner5 min read· Day trading

The PDT rule explained

The Pattern Day Trader rule requires a minimum $25,000 account balance if you make 4 or more day trades in a 5-day rolling window on a margin account.

The Pattern Day Trader (PDT) rule is a U.S. regulation that applies to margin accounts. If you make 4 or more day trades (round-trip buys and sells on the same day) in any 5-business-day rolling window, you are flagged as a Pattern Day Trader.

Once flagged as a PDT, you must maintain at least $25,000 in your margin account at all times. If your balance drops below $25,000, you cannot day trade until you bring it back above.

The rule only applies to margin accounts, not cash accounts. If you trade a cash account, there is no PDT rule. However, cash accounts have their own restrictions: you can only use settled funds, and trades take T+1 to settle.

The PDT rule is why many beginners start with swing trading instead. Swing trades held more than one day do not count toward the PDT limit, so you can swing trade without the $25,000 minimum.

If you want to day trade without the $25,000 minimum, you can open an account with a non-US broker (like a Canadian or UK broker), trade futures (which have no PDT rule), or use a prop trading firm that provides capital.

Practice what you learned

Build a simulated portfolio from yesterday's movers and see how these concepts play out with real market data.