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:
“I am the very pattern of a modern Major-Gineral,
I’ve information vegetable, animal, and mineral;
I know the kings of England, and I quote the fights historical,
From Marathon to Waterloo, in order categorical;”
—Sir William Schwenck Gilbert (1836–1911)
“The day of small nations has long passed away. The day of Empires has come.”
—Joseph Chamberlain (1836–1914)