Pattern Day Trader
A US regulatory designation for accounts making four or more day trades in five business days.
Also called: pdt · pdt rule · day trading rule
In plain language
The rule applies to margin accounts at US brokers. Four or more same-day round trips within five business days triggers the designation.
Flagged accounts must maintain at least $25,000 in equity. Below that threshold, day trading is restricted until the balance is restored.
It is a broker and regulatory constraint, not a market one, but it shapes what strategies are practical for smaller US accounts.
Why it matters
The rule can lock you out of closing a position the same day you opened it, which turns an intended day trade into an unintended overnight one with gap risk attached.
Common mistakes
- Being restricted mid-week and having to hold a losing trade overnight.
- Assuming the rule applies to cash accounts, where settlement rules apply instead.
Keep exploring
These concepts are connected. Understanding one usually makes the next one easier.
The firm that routes your orders to the market and holds your account.
The capital your broker requires you to post to open and hold a leveraged position.
A jump between one period’s close and the next period’s open with no trading in between.
The period each candle on a chart represents, from one minute to one month.
A written set of rules defining what you trade, how you size it, and when you exit.