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The Pattern Day Trading rule regulates the use of margin and is defined only for margin accounts. Cash accounts, by definition, do not borrow on margin, so day trading is subject to separate rules regarding Cash Accounts. Cash account holders may still engage in certain day trades, as long as the activity does not result in free riding, which ...
Keep your account balance above the requirement: If you keep your balance above $25,000 at all times, you’ll never risk violating the pattern day trading rule. The Bottom Line
For accounts without margin (aka "cash accounts"), traders who buy stock shares must have or deposit enough cash in the account on the day they are due (T+1) to pay for the purchases. Likewise, if a trader sells shares, the cash may be credited to their account balance immediately but the trade will not settle for one day.
This guide can help you get started with day trading. To profit in day trading, you'll need professional-level skills. Read on to learn more.
A cash account is an account where you fully fund all your trading activity with cash on hand, whereas a margin account allows you to borrow money in an effort to boost your returns.
Chart of the NASDAQ-100 between 1994 and 2004, including the dot-com bubble. Day trading is a form of speculation in securities in which a trader buys and sells a financial instrument within the same trading day, so that all positions are closed before the market closes for the trading day to avoid unmanageable risks and negative price gaps between one day's close and the next day's price at ...