Stock Trading and Other Things

Could someone explain the Pattern Day Trading rule to me?

How they word it is rather confusing.

In a five day trading week does this mean I can only make 3 trades.

Or does it mean I can only make 3 trades a day

Or does it mean I can't trade the same equity 3 times in the same day.

Public Comments

1. If you make more than 4 day trades in a 5 day period, you will be labelled a "pattern day trader" and will not be allowed to make anymore day trades unless you have at least $25,000 in total equity in your account. Your account will be frozen for 90 days. All brokers are required to do this by Federal laws. Even overseas brokers are required to do this if they trade U.S. stocks.

Take any five consecutive trading days, it could be from Wednesday one week to Tuesday the next week, because the weekend days are ignored. if you make more than 4 day trades total you will get your account frozen. This happens even if the day trades are different stocks.

Quoting from the first link below:
"If a trader is classified as a pattern day trader according to the SEC definition, and the trader does not have the required $25,000 deposit, their trading account will be frozen for 90 days. Once this happens, the trader will either have to deposit enough equity to bring their trading account up to the $25,000 limit, or wait until the 90 day hold has expired. "