Direct Answer
The legacy FINRA Pattern Day Trader rule designates any trader who executes 4 or more day trades in 5 business days in a margin account as a Pattern Day Trader, requiring a $25,000 minimum equity balance. FINRA replaced this framework with new intraday-margin requirements effective June 4, 2026. Eligible firms may continue using legacy PDT provisions during a permitted transition period ending no later than October 20, 2027. The rule applies only to margin accounts; cash accounts are not subject to PDT equity requirements but face payment and settled-funds constraints. Always confirm the broker's current implementation before assuming either framework applies.
Pattern Day Trader (PDT) Rule Reference
Legacy PDT Rule Key Parameters
Legacy FINRA framework, still in use at firms during the transition window through October 20, 2027. FINRA replaced this with new intraday-margin requirements effective June 4, 2026.
| Parameter | Value |
|---|---|
| Day trades triggering PDT designation | 4 or more day trades within any 5 business days |
| Account type affected | Margin accounts only |
| Minimum equity required | $25,000 (legacy; new intraday-margin framework effective June 4, 2026) |
| Consequence of falling below minimum | Account restricted to closing transactions only until balance is restored |
| Time to restore | Same-day deposit or transfer of funds to reach $25,000 |
| Exemptions | Cash accounts; accounts at non-U.S. brokers; accounts with equity above $25,000 |
Sources: FINRA: Margin Requirements for Day Trading; FINRA: Understanding the New Intraday Margin Requirements. Last verified: September 2026.
Frequently asked questions
What counts as a day trade under PDT rules?
Under the legacy FINRA pattern day trader framework, a day trade is defined as buying and selling (or short selling and buying to cover) the same security on the same day. Partial closes count: if you buy 100 shares and sell 50 the same day, then sell the remaining 50 the next day, only the first 50-share sell is a day trade. Options day trades: buying 10 calls and selling all 10 the same day counts as one day trade. Opening multiple legs of an options spread and closing them the same day may count as multiple day trades. Stocks held overnight and sold the next day do NOT count as day trades. The PDT count resets on a rolling 5-business-day basis. FINRA's intraday margin requirements replaced this framework effective June 4, 2026, and firms may keep using the legacy provisions through October 20, 2027, so confirm which framework your broker applies.
How can traders avoid PDT restrictions with under $25,000?
Under the legacy pattern day trader rule, which firms may keep applying through October 20, 2027, the options for traders with less than $25,000 who want to day trade are: (1) Use a cash account (no margin) -- no PDT restrictions, but limited to settled funds (T+1 settlement means you must wait 1 day after a sale before using proceeds for a new purchase); (2) Trade with a U.S.-based futures broker (futures accounts are not subject to PDT rules) -- trading ES or MES futures allows unlimited day trades; (3) Open accounts at multiple brokers (spreading day trades across 3 brokers to stay under 4 per broker in 5 days -- a legal but logistically complex workaround); (4) Trade in an offshore broker (not subject to U.S. PDT rules, but carries other risks). Swing trading (holding positions overnight to avoid day trade classification) is another approach. FINRA's intraday margin requirements, effective June 4, 2026, have no $25,000 minimum equity requirement for day trading, so ask your broker which rules it applies today.
What is the margin call process if an account falls below $25,000?
Under the legacy framework, when a PDT-designated account falls below $25,000 minimum equity: (1) the broker issues a margin deficiency notice; (2) the account is immediately restricted from opening new day trades (closing existing positions is still allowed); (3) the trader has until end of trading day to deposit additional funds, or the restriction remains; (4) a 90-day trading restriction is typically imposed if the account is flagged for excessive PDT violations without meeting the equity requirement -- during this period, the account may only be permitted to make 3 day trades per 5-day period. Each broker's specific enforcement varies; some are more lenient than FINRA's minimum rules. Since June 4, 2026, FINRA's intraday margin requirements replace this process, and firms may continue the legacy approach through October 20, 2027, so how a shortfall is handled depends on your broker's implementation.
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Swoopr Editorial Team. (2026). Pattern Day Trader (PDT) Rule Reference. Swoopr Investment. https://www.getswoopr.com/tables/trading/pattern-day-trader-rule-reference/
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