A pattern day trader is defined in Exchange Rule 431 (Margin Requirement) as any customer who executes 4 or more round-trip day trades within any 5 successive business days. If, however, the number of day-trades is less than or equal to 6% of the total number of trades that trader has made for that five business day period, the trader will not be considered a pattern day trader and they will not be required to meet the criteria for a pattern day trader.
A non-pattern day trader (i.e. someone with only occasional day trading), can become designated a pattern day trader anytime if they meet the above criteria.
If the brokerage firm knows, or reasonably believes a client who seeks to open or resume an account will engage in pattern day trading, then the customer must immediately be considered a pattern day trader without waiting 5 business days.
Source: Information Memo of Amendments to Rule 431 ("Margin Requirements") Regarding "Day Trading"
Read more about Pattern Day Trader: Round Trip, Requirements and Restrictions, Day Trading Buying Power, Not Defined For Cash Accounts, History, Rationale
Famous quotes containing the words pattern and/or day:
“For what is wedlock forcèd, but a hell,
An age of discord and continual strife?
Whereas the contrary bringeth bliss,
And is a pattern of celestial peace.”
—William Shakespeare (1564–1616)
“Remember the sabbath day, to keep it holy. Six days shalt thou labour, and do all thy work: but the seventh day is the sabbath of the Lord thy God: in it thou shalt not do any work, thou, nor thy son, nor thy daughter, thy manservant, nor thy maidservant, nor thy cattle, nor thy stranger that is within thy gates: for in six days the Lord made heaven and earth, the sea, and all that in them is, and rested the seventh day: wherefore the Lord blessed the sabbath day, and hallowed it.”
—Bible: Hebrew Exodus, 20:8-11.
The fourth commandment.