So, I understand the PDT rule, needing $25k in an account to day trade, however...

  • If a person is day trading, don't they need to wait 3 days to use that money again?
  • Do they just have very large bank rolls and only trade with a portion?
  • Is your account a margin account?
    – Flux
    Sep 18, 2020 at 23:42

1 Answer 1


You are only allowed to trade settled cash in a cash account. Equity trades take two days to settle (T+2). Options take one day (T+1). There is no limit to how many day trades you can make in a cash account as long as you are using settled funds.

If you are labeled a Pattern Day Trader (one who executes 4 or more day trades in options and equities in a rolling five business day period in a margin account) then you must maintain $25k of marginable securities and/or cash in your account.

A margin account allows you to use unsettled funds, avoiding all settlement date related violations that could happen in a cash account.

  • So for the margin account, do they always give you margin to trade with the unsettled funds? you could theoretically make many trades and it would just be covered? Is there any point where you need to wait for settlement on margin accounts?
    – dansch
    Sep 20, 2020 at 0:24
  • Some broker's have a policy against excessive trading. Some examples... Firsttrade: Trading in a margin account would allow you to use unsettled funds; this will avoid all the settlement date related violations that could happen in a cash account. Sep 20, 2020 at 2:49
  • Fidelity: Limited margin means you can use unsettled cash proceeds in your IRA to trade stocks and options actively without worrying about cash account trading restrictions or potential good faith violations Sep 20, 2020 at 2:49

You must log in to answer this question.

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