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I've been trading options on a pattern day trading account for a couple of years and now want to trade stocks.

Options are settled overnight and funds available the next day. And day trading buying power for over $25,000 in account is 4 x.

How does this work for stocks where settlement is T+2?

Does the broker lend you the funds on margin to be able to trade the next day and is the buying power still 4 x?

Example: If I have $30,000 cash in account and day trade $120,000 worth of stocks, do I have to wait 2 days to trade again, or will the broker lend me the funds on margin till it's settled so I can trade another $120,000 the following day?

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The Pattern Day Trader rule is the same for options and equities other than the settlement time. It offers 4x leverage intraday (2x overnight) unless the broker has a more restrictive margin requirement or if you are trading leveraged ETFs which have higher margin requirements.

Waiting two days to trade again only applies to a cash account (T+2). The margin account allows you to trade again, immediately.

Do not approach 4x intraday because intraday price fluctuations may put you over the limit and cause a margin violation

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  • Thanks Bob. I also gather from an answer you gave to another question, that even though the broker is effectively lending you $ till funds are settled there is no margin charge. And actually I do hope to approach the limit as I will make only about 4 or 5 trades a day and not be holding any positions for more than a few minutes at a time, so should not have any margin violations. But thanks for the tip. – DreamWvr Apr 20 at 0:56

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