1

I've read several definitions of PDT and I think I get the gist regarding round trips.

But just to be certain, I'd like to offer an absurd/contrived example...

Monday (9:31 AM) : Buy  100 shares of XYZ
Monday (3:59 PM) : Sell 100 shares of XYZ

Tuesday (9:31 AM) : Buy  100 shares of XYZ
Tuesday (3:59 PM) : Sell 100 shares of XYZ

Wednesday (9:31 AM) : Buy  100 shares of XYZ
Wednesday (3:59 PM) : Sell 100 shares of XYZ

Thursday (9:31 AM) : Buy  100 shares of XYZ
Thursday (3:59 PM) : Sell 100 shares of XYZ

Friday (9:31 AM) : Buy  100 shares of XYZ
Friday (3:59 PM) : Sell 100 shares of XYZ

(and so on, forever...)

Assuming that there is no other trading activity in this account whatsoever...

Would this account be marked as PDT?

  • In short: yes you will be flagged as a PDT. Look at your brokerage rules on this, they can freeze your account up to 6 months (depending on brokerage) and in that timeframe you can't do anything - if you are flagged as a PDT without a margin account multiple times. – NuWin Dec 1 '16 at 4:26
4

In the U.S., the rules for day trading are set by the Financial Industry Regulatory Authority (FINRA). FINRA has a page detailing the day trading rules:

Day-Trading Margin Requirements: Know the Rules

According to this page, a day trade is defined as buying and then selling (or selling short and then buying) a security on the same day. An investor is then considered a pattern day trader the first time he or she does four day trades in a five day period, if the day trades are at least 6% of the total trading activity.

Based on this definition, the account in the hypothetical scenario you've posted would be flagged as a pattern day trader.

  • Thanks. What if the symbol was different each day? The wording is not super clear on that point on the FINRA page. – x2001 Nov 30 '16 at 16:34
  • @x2001 It doesn't matter. As soon as you do 4 day trades in a week, you are a pattern day trader. You could do 4 day trades in one day with four different stocks, and you'd be a pattern day trader in one day. – Ben Miller Nov 30 '16 at 16:36

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