If you make 4 or more day trades within a 5-day period using a margin account, you can be considered a pattern day trader. Learn about the PDT rule with Tim Bohen!
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The pattern day trader (PDT) rule applies to traders that have less than $25,000 in their trading account. If you make four or more day trades within a five-day period using a margin account, you can be considered a pattern day trader.
Many new traders get stuck or blocked from trading by their broker because they don't understand how some of these rules apply. Understanding that a trader only gets three day trades in a rolling five day period may help avoid being blocked from trading. Quite frequently, brokers will lock an account for 90 days after the PDT rule is broken.
For example, if you make three day trades on Monday, you cannot make another day trade until the following Monday. If you make a day trade on Monday, another on Tuesday, and another on Wednesday, you've now used all three of your day trades and you cannot make another one until the following Monday. But that following Monday, you’ll only get that one trade back.
New traders with small accounts often trade volatile stocks to quickly grow their accounts. These traders especially should be paying attention to the PDT rule so they’re not stuck in good trade-turned bad.
Always be aware of how many day trades you’ve made in a 5-day rolling period. Write it down, or keep it in your trading journal.
#StocksToTrade #PDT #PatternDayTrader
*Tim Bohen teaches skills others have used to make money. Most who receive free or paid content will make little or no money because they will not apply the skills being taught. Any results displayed may be exceptional. We do not guarantee any outcome regarding your earnings or income as the factors that impact such results are numerous and uncontrollable.
You can lose money trading stocks. Do not invest money you cannot afford to lose. You understand and agree you will consider the important risk factors in deciding to purchase any of our products or services.
🔴 Subscribe for more free Stock Trading tips: YouTube.com/StocksToTrade
Share this video with a fellow Trader: https://youtu.be/0ykcwmhvoGM
✅ Links we mention and recommend:
Try StocksToTrade for 14 Days for $7: https://stockstotrade.com/7daytrial/
Get our FREE weekly watchlist here: https://stockstotrade.com/watchlist
Check out the SteadyTrade podcast: https://steadytrade.com
✅ Recommended video: https://youtu.be/CPDjFpfw5OQ
✅ Recommended playlists:
Stock Trading 101: A Day Trader's Guide: https://www.youtube.com/watch?v=G_v3GMkKCjk&list=PLWWz2BSabm3bG64ohfJ-CnnVTjLCWwvei
Advanced Stock Trading Tips: https://www.youtube.com/watch?v=OXLs_-PgMUk&list=PLWWz2BSabm3YCZdk7ocrBXGJaLVXXFUYb
StocksToTrade Software Tips and Tricks: https://www.youtube.com/watch?v=jiTi-chHNyo&list=PLWWz2BSabm3ay_lvQC9JN_1niB78bI7ga
Weekly Trading Recap Videos: https://www.youtube.com/watch?v=_n0XaDt1XFY&list=PLWWz2BSabm3b3-4DcEx98TzNPLAKcq6ES
✅ Follow StocksToTrade on social media:
Instagram: https://www.instagram.com/stockstotrade/
Facebook: https://www.facebook.com/StocksToTrade/
Twitter: https://twitter.com/StocksToTrade
The pattern day trader (PDT) rule applies to traders that have less than $25,000 in their trading account. If you make four or more day trades within a five-day period using a margin account, you can be considered a pattern day trader.
Many new traders get stuck or blocked from trading by their broker because they don't understand how some of these rules apply. Understanding that a trader only gets three day trades in a rolling five day period may help avoid being blocked from trading. Quite frequently, brokers will lock an account for 90 days after the PDT rule is broken.
For example, if you make three day trades on Monday, you cannot make another day trade until the following Monday. If you make a day trade on Monday, another on Tuesday, and another on Wednesday, you've now used all three of your day trades and you cannot make another one until the following Monday. But that following Monday, you’ll only get that one trade back.
New traders with small accounts often trade volatile stocks to quickly grow their accounts. These traders especially should be paying attention to the PDT rule so they’re not stuck in good trade-turned bad.
Always be aware of how many day trades you’ve made in a 5-day rolling period. Write it down, or keep it in your trading journal.
#StocksToTrade #PDT #PatternDayTrader
*Tim Bohen teaches skills others have used to make money. Most who receive free or paid content will make little or no money because they will not apply the skills being taught. Any results displayed may be exceptional. We do not guarantee any outcome regarding your earnings or income as the factors that impact such results are numerous and uncontrollable.
You can lose money trading stocks. Do not invest money you cannot afford to lose. You understand and agree you will consider the important risk factors in deciding to purchase any of our products or services.
What about adding shares to a winner, and selling off some to lock in profits, then finallh closing the trade within minutes? Does this count as 2 pdts? Or just one since its the same stock ?
good to know that. Thanks
Another way to get out of that rule is they have multiple brokers but then you have to finance all the brokers
I use the cash account so I don’t really have to worry about that rule, but that was a good video. I didn’t know about the rolling day trading rule!!! Got them all back on Monday. I’ve been thinking about getting a margin account just so I could short.
Don’t like the pdt
Does this apply for margin account that exceeds over 25k in value?
Webull let’s you know at the bottom of the trading charts, just how many you have left to use.
I can not find the answer to these questions anywhere… 1. I have a margin account with $5000 and I never touch the margin money when trading…. What does a rolling 5 day period mean if I trade 2 or 3 times per day? Can I trade twice a day, day after day with that 5 day period rolling forward subtracting the previous day trades? I thought it was 4 day trades within that 5 day rolling rule with TD Ameritrade/Schwab?
Great video! Quick question, I thought that PDT doesn't apply if you have more than $25k in your trading account. Is that not true?
So if I buy apple on Monday and sell on same Monday is that 2 trades or 1? If same Monday I also trade general electric. Is that considered my second. Trade. ? Hope I made sense. Thank you in advance.
Hey, I'm starting with 500$ and just found out about this rule, Im probably going to trade until I have 25k then day trade like crazy after that, the one I have been watching does the same thing almost everyday (it's very predictable) I'll just rely on that.
I have a question so I used robinhood and I was doing 3 trades in one day but on td ameritrade I can only do one trade and I have to let the trade settle so for example if I had 10,000 thousand dollars on td ameritrade and used let's say all 10 thousand for 1 trade on a Monday I would have to wait till Wednesday to trade again. But if I had the same 10,000 dollars on robinhood I could use the same 10,000 dollars on a Monday for 3 trades. So my question is I'm so close to having 25,000 dollars so will I be a le to day trade as much as I want in td ameritrade, I'm thinking the reason on Robin hood I can trade 3 times in one day is because it's a margin account but on td ameritrade it's just a regular account. So will I be able to trade more on td ameritrade or does it have to be switched to a margin account once I get 25,000 dollars in my account
Tim, the rule does not apply to trading long, correct? Only for margin traders ? A bit confusing 😎
Does this only apply to one stock back to back or trades in general? If I trade Stock X 3 times am I still good to trade Stock Y 3 times?
Very clear and helpful. Thank you very much.
OK so you can trade only 3 days every 5 days. So 3 days on and 5 days off.
With all the sickos shooting up innocent people, I don’t get why they can’t target the people that designed this rule to handicap the poor from becoming wealthy.
What happens if you have say $27,000 in your account the. Then the account t dips to 24,000. That would violate the day trading rule? What if by the end of the day your account was at $28,000
Is it five days down to the minute or as soon as Monday starts I get it back?
Why the SEC made such rule?
So as long as I have over 25K or more I can day trade all I want without any penalties or restrictions
and none of these things you mentioned apply?
Does the Pattern Day Trading Rule or FINRA Rule apply to investors that live outside the USA? Or are they free of this rule or do they have another rule?
Box your shares through another broker if they lock you out!!
I am so glad you patiently and clearly explain these little intricacies of the stock world. I had the misunderstanding that it was 3 day trades a day, with NO awareness of the rolling 5 days. Tim S. keeps saying "hold overnight," so I thought if I held overnight, it wouldn't be counted a day trade. I just heard about the rolling 5 day period, today, so of course I needed to look it up to understand it better. I'm glad my co-worker corrected me, otherwise, I might have been caught & penalized with acting on wrong info.
Is it 3 buy 3 sell in 5 days? Or total of 3 either way mixed?
Hi Tim,
I'm fairly new to the world of options trading and have been getting into the more intermmediate strategies such as spreads. My question is: If my account balance is under $25,000 on a margin account and I open a bear call spread, will that spread be considered one trade or will it be considered two trades since the trade techinically consists of me opening two different positions? Please let me know. If anyone else is willing to answer my question it would be much appreciated. Thanks!
Thanks so much for explaining this rule. I was not aware of it and at the beginning of the video I thought that weekends were part of the 5 days count. Now I know is from M-F and starts again on Mon. Blessings
No not yet Tim
Yes sir thank
Are you dealing with the pattern day trader rule? Are you frustrated by it? Have you ever run out of day trades? Be sure to comment below and let me know!