I have a question regarding day trading abilities and limits. From what I understand, you can only make 4 trades per day and have to wait 24-48 hours to get your money back after you sell a stock you previously bought.

As a day trader, if you have 25,000 USD in your account, would you have to wait or would you immediately get your money back?

Suppose I have 25,000 USD in my account. I buy 25,000 shares of a stock and it goes up by a dollar. If I sell it that same day (making a 25k profit and also getting back my original 25k), would I be able to reuse that money to buy the same stock over and over throughout the day? If not as a day trader, is there another way I could accomplish this? And if this is doable, how could I go about doing the same thing without 25k starting money in the USA?

  • 2
    Isn't this the kind of thing you want to ask your broker? If only for the fact that some may apply stricter rules than others. i.e. The SEC may offer a set of rules that tells the broker the the most lenient thing they are permitted, but the broker itself may have rules they apply to newer accounts until you have a history, some time with them. Commented Feb 2, 2020 at 16:42

2 Answers 2


Settlement refers to the transfer of funds and the title of a security between the buyer and the seller. Equities (stocks, bonds and ETFs) have T+2 settlement whereas options and government securities are T + 1. There are some exceptions.

You are only allowed to trade settled cash in a cash account. That means that with T+2, the funds from a sale will not be available for two days. There is no limit to how many day trades you can make in a cash account as long as you are using settled funds. For example, assuming that you do not pay commissions, if you have $10,000 of settled cash in your account, you can make ten $1,000 purchases in a day. Once done, you will have to wait 2 days until the trades settle and the funds are back in your account.

A margin account is required for certain types of transactions (naked options, leveraging buying, short selling). In a margin account, you can borrow money from your broker to purchase stock. Reg T initial margin for non leveraged equities is 50% though brokers can require higher initial margin. Some securities have higher margin restrictions (leveraged ETFs, stocks below $5).

In the USA, a Pattern Day Trader is defined as a person who executes 4 or more day trades (options and equities) in a rolling FIVE business day period in a margin account, provided the number of day trades are more than six percent of the customer's total trading activity for that same five-day period.

A PDT must maintain a minimum equity of $25k on any day that trades are made. It must be in the account prior to the day trading. If the account falls below $25k, the PDT will not be permitted to day trade until the account is restored to the $25k minimum equity level. You will have at most, 5 business days to deposit funds to meet the call. Until the call is met, day-trading will be restricted to two times maintenance margin excess. If the margin call is not met by the fifth business day, the account will be further restricted to trading only on a cash available basis for 90 days or until the call is met.

A PDT is allowed intraday to trade four times the maintenance margin excess in the account as of the close of business of the previous day but must revert to the standard 50% overnight margin by the end of the current day. Brokers have the right to set more restrictive levels of margin (less than 4:1). In reality, you can't go to 4X because market fluctuations will trigger a margin violation.

While Reg T margin is 50% and PDT intraday margin is 25% (SEC limits), brokers can have higher house requirements and restrict the amount of margin offered.

  • I understand what you are saying to an extent, however, I am still a little unsure about if what I am asking is possible. Simply put, if I maintain a balance of 26k in my account, and use 1k of that to buy a stock and sell it, would I have to wait 24-48 hours for the transaction to clear or would I immediately get the profit and money back as soon as the sale is made and be able to purchase more of the same stock to sell again (again and again) throughout the day?
    – Cole
    Commented Feb 2, 2020 at 18:50
  • 1
    If you have $26k in your account and you use $1k to buy and sell stock, you have $25k remaining to trade which is 25 more day trades of $1k each. The gist of your question is really what happens after you run out of settled cash? A margin account allows you to borrow money from your broker. It can be done as leverage or it can be for cash flow convenience while waiting for trades to settle. The latter allows you to use unsettled funds and continue to trade in your margin account. Commented Feb 2, 2020 at 20:32

Yes, you still have to wait T+2, whether you’re using a small account or one with over $25,000.

All the $25,000 and over balance gives you is the ability to trade as many times as you like, like a cash account, but with margin too.

The advantage is the PDT restriction is lifted and you can use margin when you run out of settled cash.

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .