5. Pattern Day Trader Rule
If your margin account does not have a value of at least $25,000, then you are bound by the “Pattern Day Trader” or “PDT Rule”. This rule restricts you from placing more than 3-day trades within a rolling 5-day period.
If you violate the PDT rule, a broker can restrict your account from placing any day trades or even restrict it to closing transactions only for a certain period of time. But there are ways without violating the PDT rule. Those with less than $25,000 without margin enabled – also known as a cash account – aren’t bound by the PDT rule. The caveat is that they can only trade with the amount of settled cash in their account and there’s no leverage or margin.