Pattern Day Trade Protection
Pattern Day Trade (PDT) Protection alerts you as you place your 2nd, 3rd, and 4th day trades in a 5 trading day period in an effort to help you avoid being flagged as a pattern day trader (PDT).
On the 2nd and 3rd day trades, you’ll be given a few options to help avoid getting flagged.
- Switch to a non-margin account. A non-margin account isn’t subject to PDT US regulation. This will allow you to continue day trading and participating in the Brokerage cash sweep program.
- Maintain $25,000 in portfolio value. This won’t prevent a PDT flag, but will enable you to continue day trading if you do get flagged.
- Monitor your day trades. Placing fewer than 4 day trades in any rolling 5 trading day period will help avoid a PDT flag.
On the 4th day trade, you’ll have to disable PDT Protection in order to proceed with your trade, or take one of the above actions to avoid being marked as a pattern day trader.
Keep in mind
Even if PDT Protection is disabled, we’ll still alert you before you place your 4th day trade in the 5 trading day window.
If your portfolio value is above $25,000, you will not get alerts for your 2nd and 3rd day trade, even if you have PDT Protection enabled.
To turn Pattern Day Trade Protection on or off:
- Select Account (person icon) → Menu (3 bars) or Settings (gear)
- Select Investing
- Scroll to the Day Trade section and select Day Trade Settings
Multiple executions and pending orders
Multiple executions and pending orders
Pattern Day Trade Protection will consider all the orders you’ve placed,not only orders that have been executed. For example, if you’ve purchased a stock and then set a sell limit order on the same day for the same stock, Pattern Day Trade Protection will count that order as 1 day trade, regardless of whether or not it gets executed. However, if the trade does not execute, it won’t actually count as a day trade for US regulatory purposes.
Also, Pattern Day Trade Protection doesn’t account for orders with multiple executions. If an order you place fills through multiple executions instead of a single fill, you may not receive the Pattern Day Trade Protection warning. Keep this in mind when placing very large orders, or orders on low-volume stocks.
Pattern Day Trade Protection is designed as an added precaution that you can override and move forward with an order.
Robinhood U.K. Ltd (Robinhood UK) is a company registered in England and Wales (09908051) and is authorised and regulated by the Financial Conduct Authority (FRN: 823590). Robinhood UK onboards UK customers and has the lead customer relationship with UK customers in relation to their use of the Robinhood UK app and website. Robinhood UK introduces UK customers to Robinhood Securities, LLC for order routing, execution, clearing, settlement, arranging custody services and margin lending to eligible UK customers with margin accounts. Robinhood Securities, LLC is regulated in the US by the SEC and FINRA. Robinhood UK and Robinhood Securities, LLC are subsidiaries of Robinhood Markets, Inc.
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Reference No. 3260157
FAQs
If you exceed your DTBP, a day trade margin call will be issued for the deficiency. The call is due in five business days and can be met by making a deposit, journal or transfer of funds, journal or transfer of marginable stock, or sale of long options or non-margined securities.
How long does a pattern day trader restriction last? ›
A PDT who chose to still force in day-trading will result in Day Trading Margin Call (DT Call) and 90 Days Restriction (90DR) of liquidating-transactions only.
What happens if you get marked as a pattern day trader on Robinhood? ›
If your account is flagged for PDT, you're required to have a portfolio value of at least $25,000 to continue day trading. Your portfolio value is the sum of your cash, stocks, and options, and doesn't include crypto positions.
What is pattern day protection? ›
Pattern Day Trade (PDT) Protection alerts you as you place your 2nd, 3rd, and 4th day trades in a 5 trading day period in an effort to help you avoid being flagged as a pattern day trader (PDT). On the 2nd and 3rd day trades, you'll be given a few options to help avoid getting flagged. Switch to a cash account.
Does the PDT flag go away? ›
The Equity Maintenance Call ends when either you bring the account equity above $25,000, or the PDT flag is removed from the account. A pattern day trading flag can only be removed one time from your account. If the account is later reflagged as PDT, the flag will remain on the account.
What happens if you are flagged as a PDT but have over 25,000? ›
When a customer with more than $25,000 is flagged as a PDT, the customer can day trade for unlimited times if he/she has sufficient day-trading buying power(DTBP). Your DTBP is equal to the excess maintenance margin that is available in your account multiplied by two (or by four, brokers can adjust the leverage).
How do you avoid being flagged as a pattern day trader? ›
Here are some common ways to avoid that label.
- Open a cash account. If a day trader wants to avoid pattern day trader status, they can open cash accounts. ...
- Use multiple brokerage accounts to avoid the PDT Rule. ...
- Have an offshore account. ...
- Trade Forex and Futures to avoid the PDT Rule. ...
- Options trading.
Violating pattern day trading regulations can have serious consequences, including penalties imposed by regulatory bodies. Common repercussions for non-compliance may include trading restrictions, fines, or even suspension or expulsion from the securities industry.
Can I still trade if I'm marked as a pattern day trader? ›
You could inform your broker (saying “yes, I'm a day trader”) or day trade more than three times in five days and get flagged as a pattern day trader. This allows you to day trade as long as you hold a minimum account value of $25,000—just keep your balance above that minimum at all times.
How to get rid of PDT flag? ›
If you wish to have the PDT designation for your account removed, you may request a PDT Reset through Account Management in one of two ways: Click the Support tab followed by Tools. Scroll to the bottom of the list and select PDT Reset.
Just as how long you have to wait to sell a stock after buying it, there is no legal limit on the number of times you can buy and sell the same stock in one day. Again, though, your broker may impose restrictions based on your account type, available capital, and regulatory rules regarding 'Pattern Day Traders'.
What triggers pattern day trading? ›
According to FINRA rules, you're considered a pattern day trader if you execute four or more "day trades" within five business days—provided that the number of day trades represents more than 6 percent of your total trades in the margin account for that same five business day period.
What is the 3-5-7 rule in trading? ›
A risk management principle known as the “3-5-7” rule in trading advises diversifying one's financial holdings to reduce risk. The 3% rule states that you should never risk more than 3% of your whole trading capital on a single deal.
How to remove PDT flag in Robinhood? ›
There's one more thing you can do if Robinhood flags you as a day trader: You can ask to have the flag removed. Robinhood allows many account holders a one-time PDT flag removal. You'll have to contact Robinhood's customer support through the app to find out if you're eligible.
How many times can you pattern day trade? ›
If you place your fourth day trade in the five-day window, your account will be marked for pattern day trading for ninety calendar days. This means you won't be able to place any day trades for ninety days unless you bring your account equity above $25,000.
Can I get around pattern day trader rule? ›
Use multiple brokerage accounts to avoid the PDT Rule
Because many brokerages have commission-free trading, this can be a viable option to avoid PDT restrictions. While opening multiple accounts is one way to avoid PDT status, day traders should be cautious.
