Day Trading. Minimum of $25,000?

Here's my question. I understand that SEC rules require someone to have at least $25,000 in order to day trade and not be labeled as a pattern day trader. My questions is as follows, is the 25k supposed to be entirely composed of cash, or can it be completed by borrowing on margin. In other words by using a margin account.

Thanks.

Also I fully understand the risks associated with day trading, and the utilization of margin accounts. I've been successfully investing long term, but thanks to the current choppiness of the market, certain capital can be devoted to day trading. As I feel that there's a certain niche currently that can be exploited. Off course this capital is excess amounts of money that can be exposed to greater risks, which I'm fully aware of.

Thanks, once again for taking the time to answer my question.

Public Comments

1. http://www.sec.gov/answers/daytrading.htm
See second paragraph.

You can meet the $25,000 minimum equity requirement with a combination of "cash and eligible securities".
See section of webpage below that covers this issue.

http://www.finra.org/Investors/SmartInvesting/AdvancedInvesting/DayTrading/p005906

2. You must have an account valued at $25k or more. Borrowing on margin does not increase the value of your account.

The value of your account is

cash + value of securities - amount of loans

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I want to correct one minor error in your question. You can still be labeled as a pattern day trader with over $25,000 in your account. The difference is that there are no penalties associated with being a pattern day trader if you have over $25,000 in you account.

3. yeah