6 Replies to “What is the Pattern Day Trader Rule and How to Avoid the PDT Rule”

  1. Wow that was overwhelming to read! Great job on breaking down the PDT rule. I think I get it. I don’t know much about trading, but my question would be why would someone open and close a trade in one day? From my understanding of stocks, isn’t it more of a long term investment?. Thanks.

    Michael

    1. Great question Michael.

      There are countless different trading strategies. Some are longer term and some are very short term. Some traders make money by holding their stocks for a few minutes to hours so these are the traders that are affected by the PDT rule. 

  2. Thanks for clarifying the PDT rule! I currently trade on the FOREX, and have been starting to read about day trading stocks too but I soon found out that you need $25k. I wasn’t totally sure why this was, but your explanation on how to avoid the PDT rule was very helpful, i’m definitely interested in SureTrader.

    I also never thought about having a few different brokerage accounts to avoid the PDT rule. Although a bit tedious, could be a good option to get going.

    Thanks for the recommendation.

  3. Hi – I enjoyed reading the article above. I’m still a little confused on the rule. At the risk of sounding “sneaky”, would the following scenario count as a PDT:

    $5,000 Margin Account with TD Ameritrade (for example)
    Monday 10am – buy 10 shares of MSFT.
    Monday 4pm – sell 8 shares of MSFT.
    Tuesday 10 am – sell 2 shares of MSFT.

    I’m wondering if holding part of the original trade overnight would keep the overall transaction from being considered a PDT.

    I appreciate the help in understanding!

    1. Thanks for the great question. I am pretty sure that this still would count as a day trade. As long as you open and close a trade in one asset on the same day, it will be considered a day trade. Therefore, the closing trade at 4pm would still be considered a day trade as you just opened that trade on the same day.
      Hopefully, this helps.

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