Your version of Internet Explorer is no longer supported and may not display all the features of our website. For the best experience, please update your browser with the latest version. What is the definition of a "Pattern Day Trader"?

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Scottrade defines a pattern day trader as any customer who executes four or more day trades within five business days. What is a Day Trade? A day trade is the purchasing and selling or the selling short and purchasing to cover of the same security on the same day including pre- and post-market in a margin account except for: A long security position held overnight and sold the next day prior to any new purchase of the same security, or b.

A short security position held overnight and purchased the next day prior to any new sale of the same security. Will Pattern Day Traders be required to have a margin account? What are the consequences if I have a margin account and I day trade four times in five rolling business days? Do the day trading rules apply to options? Yes, they apply to all equities and options. Once an account is coded as a "Pattern Day Trader", can the account be re-coded as a non-day trading account?

No, not for a period of 90 days. If 90 days pass without any day trade transactions, your Pattern Day Trading designation will be removed and the surveillance process will start over.

As an alternative, you may pay off the margin debit balance, close any short positions and trade in the cash account. Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Any specific securities, or types of securities, used as examples are for demonstration purposes only.

None of the information provided should be considered a recommendation or solicitation to invest in, or liquidate, a particular security or type of security or account. Such consent is effective at all times when using this site.

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Brokerage products and services offered by Scottrade, Inc. All investing involves risk. The value of your investment may fluctuate over time, and you may gain or lose money. In this instance, equity is defined as Total Brokerage Account Value minus Recent Brokerage Deposits on Hold. The performance data quoted represents past performance. Past performance does not guarantee future results. The research, tools and information provided will not include every security available to the public.

Although the sources of the research tools provided on this website are believed to be reliable, Scottrade makes no warranty with respect to the contents, accuracy, completeness, timeliness, suitability or reliability of the information. Information on this website is for informational use only and should not be considered investment advice or recommendation to invest.

Scottrade does not charge setup, inactivity or annual maintenance fees. Applicable transaction fees still apply.

Scottrade does not provide tax advice. The material provided is for informational purposes only.

Please consult your tax or legal advisor for questions concerning your personal tax or financial situation. Investors should consider the investment objectives, charges, expense, and unique risk profile of an exchange-traded fund ETF before investing. A prospectus contains this and other information about the fund and may be obtained online or by contacting Scottrade. The prospectus should be read carefully before investing. Leveraged and inverse ETFs may not be suitable for all investors and may increase exposure to volatility through the use of leverage, short sales of securities, derivatives and other complex investment strategies.

Investors should monitor these holdings, consistent with their strategies, as frequently as daily. Investors should consider the investment objectives, risks, charges and expenses of a mutual fund before investing. No-transaction-fee NTF funds are subject to the terms and conditions of the NTF funds program.

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It contains information on our lending policies, interest charges, and the risks associated with margin accounts. Options involve risk and are not suitable for all investors. Supporting documentation for any claims will be supplied upon request.

Consult with your tax advisor for information on how taxes may affect the outcome of these strategies. Keep in mind, profit will be reduced or loss worsened, as applicable, by the deduction of commissions and fees. Market volatility, volume and system availability may impact account access and trade execution. Keep in mind that while diversification may help spread risk, it does not assure a profit, or protect against loss, in a down market. Third-party websites, research and tools are from sources deemed reliable.

Scottrade does not guarantee accuracy or completeness of the information and makes no assurances with respect to results to be obtained from their use.

Day Trading FAQs | Scottrade

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