Pattern Day Trader Rule

What is the pattern day trader (PDT) rule?

The pattern day trader (PDT) rule is the legacy FINRA framework known for its trade-count designation and $25,000 minimum equity requirement for margin accounts that day trade frequently. FINRA’s replacement became effective June 4, 2026, with a firm transition ending October 20, 2027.

How the legacy PDT trade-count test works

The legacy test requires four or more day trades during five business days and more than 6% of total trades during that period. The example’s four day trades out of 20 total trades produce 20%, satisfying both conditions.

The legacy framework also includes the firm’s reasonable-belief designation provision and the $25,000 minimum for pattern day traders.

Is the PDT rule gone? How the transition works

It still applies at firms that have not transitioned. Until the transition ends on October 20, 2027, identify the framework applied by the broker carrying the account. A firm using the legacy provisions applies its PDT controls. A transitioned firm applies the replacement’s intraday-margin requirements to covered accounts, which removes the regulatory PDT designation and $25,000 PDT minimum for those accounts.

How FINRA’s intraday-margin replacement works

The replacement focuses on margin and account equity throughout intraday activity. Firms can use real-time controls, calculate intraday deficits at the end of the day, or combine those approaches.

The operative intraday-deficit calculation excludes portfolio-margin and good-faith accounts. Those accounts follow their respective requirements. Options positions contribute to the exposure of covered accounts under the applicable product and house rules.

Day trading in margin and cash accounts

For a margin account, use the broker’s applied buying power to size the position. For a cash account, track the funds paying for each purchase and its settlement date.

A cash purchase must be paid in full by settlement. An unrestricted account can use proceeds from a fully paid sale for a new purchase; the funding and subsequent sale sequence determine the payment outcome.

For options, the options profit calculator shows the premium paid, breakeven and maximum loss, so you size the contract count to the buying power your broker shows.

Limitations of the pattern day trader rule

• Ask your broker which framework applies. Until the transition ends, two traders with the same activity can face the legacy test at one firm and intraday-margin requirements at another.
• Count every round trip at a legacy firm. The PDT test counts trades, so four small day trades out of 20 meet it as surely as four large ones.
• Size from the buying power your broker shows after the switch. The replacement measures margin and account equity, and house requirements set buying power.
• In a cash account, track each purchase’s funding to settlement. The account avoids margin rules but must pay in full by settlement, and selling a purchase before its funding settles can create a good-faith violation.

Bottom line

The pattern day trader rule is the legacy $25,000 day-trading framework that FINRA’s intraday-margin requirements replace, and firms can keep the old rules until October 20, 2027. Confirm which framework your broker applies, then size each trade against the buying power and house requirements the broker actually shows.