Day Trading - Pattern Day Trader
What is a Pattern Day Trading?
Traders who make a large amounts of trades (four or more times per day within a five-day period are considered pattern day traders. Because of the risk involved in day trading and being a pattern day trader there is a certain amount that you must have in your account to allow you to be able to legally trade they way day trader trade.
You could say there is a $25,000 buy in to get in the game of pattern day trading. Legally this is the amount needed to ensure day traders can cover any losses from previous day trading.
If you make more than 4 traders per day and you do not have $25000 in your account your account will be frozen and you can only can only close existing positions. Your only option after this is to wait 90 days or get the proper amount in your account (which is $25000). So you cannot be a Day trader if you do not have this amount.
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