How to Avoid Pattern Day Trader (PDT) Violations
Understand FINRA's Pattern Day Trader rule and avoid violations using smarter scheduling, cash accounts, and a simple round-trip tracker.
Key Takeaways
- •4+ day trades in 5 business days with <$25k = PDT
- •Track round trips; swing trade to reduce frequency
- •Consider a cash account (different settlement rules)
PDT basics (U.S.)
The Rule:
A "day trade" is opening and closing the same security on the same day. 4+ within a rolling 5-day window can flag PDT if equity < $25k.
Avoiding violations
Trade less frequently
Move to swing timeframes.
Cash account
Avoids PDT but respects T+2 settlement for stocks (can only re-use settled funds).
Journal tracker
Log date, ticker, open/close times to monitor the 5-day count.
Important notes
ETFs count too for the rule.
Day trading ETFs is subject to the same PDT restrictions as individual stocks.
Mistakes
- •Scaling in/out same day without realizing each is a potential day trade
- •Forgetting that partial fills can still count toward round trips
Account types comparison
Margin Account
Pros: Instant buying power, can short sell
Cons: Subject to PDT rule if <$25k
Cash Account
Pros: No PDT restrictions
Cons: Must wait for settlement (T+2), no shorting
Track Your Day Trades
Add a PDT counter column in your journal that auto-flags when you hit 3 day trades in 5 days.
Frequently Asked Questions
Does PDT apply outside the U.S.?
Varies—check your broker/jurisdiction.
Do options change it?
Same rule basis; settlement differs—verify with broker.