Pattern day trader

In the United States from 2001 to June 2026, a pattern day trader (PDT) was a Financial Industry Regulatory Authority (FINRA) designation for a stock trader who executed four or more day trades in five business days in a margin account, provided the number of day trades was more than six percent of the customer's total trading activity for that same five-day period.

The FINRA rule applied to any customer who bought and sold a particular security in the same trading day (day trades), and did this four or more times in any five consecutive business-day period. The rule applied to margin accounts, but not to cash accounts. A pattern day trader was subject to special rules. The main rule was that in order to engage in pattern day trading in a margin account, the trader was required to maintain an equity balance of at least $25,000. The required minimum equity must have been in the account prior to any day trading activities. Ninety days had to pass without a day trade for a person so classified to lose the restrictions imposed on them. Pursuant to NYSE 432, brokerage firms were required to maintain a daily record of required margin.

The minimum equity requirement in FINRA Rule 4210 was approved by the Securities and Exchange Commission (SEC) on February 27, 2001 by approving amendments to NASD Rule 2520.

In January 2026, FINRA proposed scrapping the rule and replacing it with new intraday margin standards. In April, the SEC approved the proposal, effective June 4, 2026. Brokers that need more time to implement the rule change may phase in their implementation over 18 months, until October 20, 2027.