What is a pattern day trader?

You’re a pattern day trader if you make four or more day trades (as described above) in a rolling five-business-day period, and those trades make up more than 6% of your account activity within those five days. There are different types of day traders, but we’ll focus on two:

What are TD Ameritrade's day trade rules?

For these reasons alone, any active trader should be aware of what these rules are and how TD Ameritrade enforces them across its accounts so that the restrictions can be avoided. FINRA defines a day trade as any position that is bought and sold (or sold and bought) on the same day in your account.

Is it a day trade to buy a security?

Just purchasing a security, without selling it later that same day, would not be considered a Day Trade. What is a “Pattern Day Trader”? FINRA provides that a Pattern Day Trader (“PDT”) is any margin account that executes four or more Day Trades within any rolling five business day period.

How many day trades can an account make?

So, an account can make up to three Day Trades in any five business day period without consequence but if a fourth (or more) are executed the account is designated (“Flagged”) as a Pattern Day Trader. What if an account is Flagged as a Pattern Day Trader?