Personal Finance & Money Asked by Funkodebat on December 28, 2020
So, I understand the PDT rule, needing $25k in an account to day trade, however…
You are only allowed to trade settled cash in a cash account. Equity trades take two days to settle (T+2). Options take one day (T+1). There is no limit to how many day trades you can make in a cash account as long as you are using settled funds.
If you are labeled a Pattern Day Trader (one who executes 4 or more day trades in options and equities in a rolling five business day period in a margin account) then you must maintain $25k of marginable securities and/or cash in your account.
A margin account allows you to use unsettled funds, avoiding all settlement date related violations that could happen in a cash account.
Answered by Bob Baerker on December 28, 2020
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