What is Pattern Day Trading (PDT) Protection?

A day trade is defined as a round-trip pair of trades where a buy occurs first, followed by a sell of the same asset. Selling shares first and then buying the same shares later in the day, would not count as a day trade. If your non-crypto balance is below $25,000, you will only be allowed to make 3 day-trades in a rolling 5-business-day period. Please be aware that a rolling 5 business day period is not the same as a calendar week. You can check your day trade count on the app by going to the Trade dashboard and clicking on 'Total Cash' -> PDT count.

If you have already made 3 day-trades in the last 5 business days, you will receive a "Pattern Day Trading (PDT) Protection" error if you attempt to make another day trade. This means you need to wait till the next business day to close that position. 

In addition to the filled orders, the system also takes into consideration pending orders in the account. In this case, regardless of the order of pending orders, a pair of buy and sell orders is counted as a potential day trade. This is because orders that are active (pending) in the marketplace may fill in random orders. Therefore, even if your sell limit order is submitted first (without being filled yet) and another buy order on the same security is submitted later, this buy order will be blocked if your account already has 3-day trades in the last 5 business days.

It is important to note that the restriction is only on day-trades. You are still allowed to close the positions that were not opened on the same day and re-enter positions that were not closed on the same day.

Important: This rule is set by the SEC and applies to all brokers regulated by FINRA.

 

The below visual explains what Pattern Day Trading could look like:

• Example A:

• Example B:

• Example C:

• Example D:

• Example E:

• Example F: