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:
“It was her stern necessity: all things
Are of one pattern made; bird, beast, and flower,
Deceive us, seeming to be many things,
And are but one. Beheld far off, they differ
As God and devil; bring them to the mind,
They dull its edge with their monotony.”
—Ralph Waldo Emerson (1803–1882)
“Men often compete with one another until the day they die; comradeship consists of rubbing shoulders jocularly with a competitor.”
—Edward Hoagland (b. 1932)