What happens if I am flagged as a Pattern Day Trader?

Once you are flagged as a Pattern Day Trader, the following apply to your account:

  • This designation is permanent. However, FINRA allows one exception in the lifetime of the account.
  • The account must start the day with at least $25,000 total account equity in order to be issued buying power.
  • If the account starts the day above $25,000 equity, additional buying power, called Day Trading Buying Power (DTBP) will be made available. This buying power is typically 4x your Option Buying Power.
    • DTBP cannot go any higher than where it starts the day.
    • Selling positions that were held overnight will not increase the DTBP.
    • DTBP used in excess of your standard Option and Stock Buying Power must be returned by the end of the trading day.
      • To avoid this situation and the resulting margin call, make sure to close enough positions so that your Option Buying Power is positive. If it is negative, additional positions need to be closed.
  • If the account starts the day below $25,000 equity, the account will not be able to open any new positions during that trading day. Closing existing positions is permitted.
    • An equity maintenance call will be issued for the amount below $25,000 that the account starts the day at.
    • Intraday increases in the market value of the account or deposits to the account will not permit the account to open new positions on that day. The account must start the day above $25,000 equity.
    • The account will need to close above $25,000 before buying power is issued on the next trading day.

Please click here to see the Day Trader section on the FINRA Website (https://www.finra.org/investors/insights/am-i-pattern-day-trader).