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Day Trading Rules

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Online InvestingHow often can I day trade?

If you have less than $25,000 in your account, you can only perform 3 day trades in a 5-day period (weekends and holidays do not count).

If you perform four or more day trades in a 5 day period you may get flagged by the SEC as a "Pattern Day Trader." This can cause you to lose your margin account status until you deposit enough cash to have $25,000 or more in your account.
Many beginning traders have been bitten by this rule!



Read more about Day Trading.
Day Trade: Buying and Selling (or Shorting and Covering) the same security on the same day.

Example 1: Safe
1. Monday: Buy and Sell MSFT
2. Monday: Buy and Sell GOOG
3. Monday: Buy and Sell F
4. Next Monday: Buy and Sell GM
Note: 3 trades in a 5-day period

Example 2: Safe
1. Monday: Buy and Sell MSFT
2. Tuesday: Buy and Sell GOOG
3. Wednesday: Buy and Sell F
4. Next Monday: Buy and Sell GM
Note: 3 trades in a 5-day period

Example 3: NOT Safe
1. Monday: Buy and Sell MSFT
2. Monday: Buy and Sell GOOG
3. Monday: Buy and Sell F
4. Monday: Buy and Sell GM
Note: 4 trades in a 5-day period

Example 4: NOT Safe
1. Thursday: Buy and Sell MSFT
2. Friday: Buy and Sell GOOG
3. Monday: Buy and Sell F
4. Tuesday: Buy and Sell GM
Note: 4 trades in a 5-day period

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