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Warrior Trading // Ross Cameron // Day Trade Warrior

Hey everyone Ross here from Warrior Training. I'm gonna talk to you today about the pattern day trader rule also known as the PDT rule. This rule came into effect in 2001 and what it states is that if you're going to day trade more than three times in a five business day rolling period that you need to maintain a minimum balance in your trading account at at least twenty five thousand dollars. Now, this is tough for a lot of beginner traders.

I know it was tough for me. When I first got started, I wasn't expecting to need twenty five thousand dollars in the account. Fortunately, there are a few different ways you can avoid being restricted by the PDT rule. One way is to go ahead and trade with a cash account and then you can day trade as much as you want.

But when you run out of cash, you've got to wait two days for trades to settle. The good news is that options trades settle overnight. so if you have ten thousand dollars in your account, you could potentially take two or three options trades each day knowing that they settle overnight and the cash will be available for you to trade with again the next day. But if you're going to actively day trade by cell by cell, then you do need a minimum of twenty five thousand dollars.

Now, something that's kind of interesting is that different brokers view round trip differently. so each trade is considered a round trip. So if you buy a thousand shares and then you sell a thousand shares, that is one round trip. No count is one of your three trades and a five day period.

What happens? However, if you buy a thousand shares, you add another thousand shares and then you sell two thousand. Well, most brokers would still consider that one round trip even though you took three individual trades you bought. Once, you bought a second time going in the same direction and then you sold all at once. What happens if you buy a thousand and then sell five hundred and then sell five hundred more? Well, you did to sell orders, but you're still considered a round trip.

You made one direction going up and one direction coming back down. In this case, however, where you buy a thousand shares, you sell five hundred and then you buy a thousand more and then you sell the rest. That's gonna count as two trades because you changed directions twice Now with some of these complex orders where you're going forward backward, forward, backward. Different brokers will view it differently.

so it's important to check with your broker and find out how they're gonna account a round trip If you do change directions mid trade, or if you just keep buying, buying, buying, buying, and then selling, selling, selling, selling. All right. So I Hope this has helped you understand the PDT rule. The biggest thing to remember is that you're limited to only three trades in a five-day period if your account is under $25,000 and it is a margin account.

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By Stock Chat

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29 thoughts on “What is the pdt rule?”
  1. Avataaar/Circle Created with python_avatars travis devey says:

    Hi Ross, first off I want to thank you for all the videos you make to help beginners like me. With the PDT rule you mention that it applies to margin accounts. My question is, say I put $2,000 into a cash account through TDAmeritrade, since it is not a margin account am I able to then able to buy and sell as many times as I want to in a day? Is there any rules, regulations, or restrictions I need to know about with the amount of trades I make in a cash account. Any insight from either you or anyone in the comments is much appreciated.

  2. Avataaar/Circle Created with python_avatars tamapua808hi says:

    you are the man ,,

  3. Avataaar/Circle Created with python_avatars Bob Poland says:

    You can day trade all you want with a cash account. I started with $1,000 split into 2 $500 I trade on webull and always get my cash early on day 2.
    Never ever got locked out as a PDT

  4. Avataaar/Circle Created with python_avatars Christian Havn says:

    Hi, thanks for a super informative channel!

    I live in Norway, Europe, and am considering opening a margin account with Lightspeed.

    Since Lightspeed is an American based platform, how can data for tax calculation be exported to Norwegian systems?

  5. Avataaar/Circle Created with python_avatars Greg Stritzel says:

    Hello Ross, I have been looking into opening a margin account in Webull, but there are a few questions that I haven't been able to get answered yet. In order to have unlimited day trades, the account must have at least $25,000 in it. Here's my hypothetical scenario:
    -My account has $25,000
    -I then take a long position of $5,000
    -Am I now under PDT? (Is the 25k minimum based on "Total Account Value" including the market value of any holding positions?)
    Hopefully that makes sense. Thanks so much for the help.

  6. Avataaar/Circle Created with python_avatars Joseph Joe says:

    So are you saying cash account can day trade without restrictions even less than 25k???

  7. Avataaar/Circle Created with python_avatars RGBjimz says:

    PDT rule is not only unamerican, its unconstitutional.

  8. Avataaar/Circle Created with python_avatars feral says:

    Robinhood makes this pretty difficult actually.

  9. Avataaar/Circle Created with python_avatars Kj lt says:

    I know I’m commenting on an old video, but does weekend count during the 5 rolling day period. Let’s say I’m counting back 5 days. Can I count the Saturday Sunday. Or exclude those and only count trading Days?

  10. Avataaar/Circle Created with python_avatars Bryan Buchanan says:

    Answered my question exactly 😎

  11. Avataaar/Circle Created with python_avatars King chala says:

    So when I turn off the PTD rule. Does my account turns into a cash account if not. How do I switch it to cash account.

  12. Avataaar/Circle Created with python_avatars Stopdafeds says:

    So if I exceeded my 3 day trades today and want to sell some stock I already had previously tomorrow I can do it? It only counts for buying and selling same day correct?

  13. Avataaar/Circle Created with python_avatars Samuel G says:

    If my robinhood is blocked for 90 day due to pdt can I keep using Webull for example or all my brochures are blocked together??? Thank you

  14. Avataaar/Circle Created with python_avatars Felipe Apolinário says:

    If my account is classified as a PDT and I deposit the $ 25k into the account, can I operate from there as many times as I want per day?

    Or do I still have the limitation of 3 trades every 5 business days?

  15. Avataaar/Circle Created with python_avatars Mjordanboys S says:

    What about the weekends

  16. Avataaar/Circle Created with python_avatars Tanner Lewis says:

    If I buy a stock at the end of the day and then sell it first thing in the morning is that considered a day trade?

  17. Avataaar/Circle Created with python_avatars hussam shareef says:

    Can I buy different stocks in same day without selling them? For example I buy 6 different stocks and ETFs in one day and repeat this process tomorrow. Will I break the rule?I mean if I only buy or only sell different stocks will I break the rule?

  18. Avataaar/Circle Created with python_avatars B 4 says:

    Is the 25k at one time payment type of thing? Or do I have to pay 25k monthly,yearly? Thanks

  19. Avataaar/Circle Created with python_avatars IamWedge says:

    Minimum balance has to be 25k. Does that mean 25k in cash or 25k with stocks and cash?

  20. Avataaar/Circle Created with python_avatars Fozzy 5000 says:

    Thanks man, just started trading last week, I really enjoy your advice, especially giving great advice on how to get started up. I wish I would of gotten started earlier but it is what it is. Thanks for sharing what you know..

  21. Avataaar/Circle Created with python_avatars Guillaume R says:

    Are resident with dual citizenship allowed to hold an offshore broker account ?

  22. Avataaar/Circle Created with python_avatars Debonair says:

    So in that case you can't buy different stock in the same day then…

  23. Avataaar/Circle Created with python_avatars Welcome2 theSimulation says:

    If I buy a stock on monday but keep it a few days then sell it on thursday, do I still have my 3 day trades? pdt rule is only if i buy and sell all in 1 day correct?

  24. Avataaar/Circle Created with python_avatars Michael Aguillon says:

    Hello Ross, thanks first of all for your efforts in giving us all this valuable information that you so generously share with the world. I have a quick question thought, if I'm not a US citizen and don't live in the US; when I sign up with a Trading Platform like say TradingStation, would the PDT Rule still apply to me?

  25. Avataaar/Circle Created with python_avatars 9to5 Trader says:

    You explained this well, thank you man, subscribed.

  26. Avataaar/Circle Created with python_avatars The Caboose says:

    So if you have less than 25k in your account, and you own 4 or more different stocks you'll never be able to cash out on all those because the max is 3 per 5 days. Am I understanding this right?

  27. Avataaar/Circle Created with python_avatars Caleb Douglas says:

    Having a cash account does not restrict how many day trades one can do regardless of how much is in that account, correct?

  28. Avataaar/Circle Created with python_avatars SpamMan says:

    PDT has cost me thousands, its quite annoying of a rule.

  29. Avataaar/Circle Created with python_avatars Andrew McKinlay says:

    Does the PDT rule apply to day traders using LightSpeed from the UK?

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