The PDT rule requires traders seeking to day trade more than three times in a rolling five-day period to keep a minimum balance of $25,000 in their margin accounts.
If an account falls below the $25,000 threshold, the trader is no longer able to execute any day trades until he/she backs up the account above that level.
- Who uses a margin account; and
- Who executes four or more “day trades” within five business days in a margin account; and
This rule assumes that traders with over $25,000 in account equity are familiar with the accepted the risks that day trading entails. Traders found breaking the PDT rule will be unable to daytrade for 90 Days.