Trading term
What is Pattern day trader?
A pattern day trader was a US label for anyone who made four or more day trades in five business days in a margin account. It required $25,000 in the account, and FINRA scrapped it on 4 June 2026.
A day trade is buying and selling the same security on the same day. Under the old US rule, four or more of them in five business days in a margin account made you a pattern day trader. From then on you needed $25,000 in the account to keep day trading. Fall below it and the broker blocked new day trades until you topped up.
The SEC approved FINRA's change on 14 April 2026, and it took effect on 4 June 2026. The label and the $25,000 minimum are gone. Brokers now check the margin your open trades need during the day, and you must cover any shortfall. Margin accounts still need $2,000.
Brokers can take until 20 October 2027 to switch, so some may apply the old rule for a while. Cash accounts were never covered by it, and neither were futures.
For example
Before June 2026, a trader with $8,000 in a margin account made a fourth day trade on a Thursday. The broker flagged the account and blocked any more day trades until they added $17,000. Under the new rule, the same trades are allowed.
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Explore Premium →Why it matters to you
The old rule kept most small accounts out of day trading. Now a US trader can start with $2,000. That makes the money you need to get in much smaller, but it doesn't change how hard it is to make day trading pay.
⚠ Allowed isn't the same as enough
The $25,000 rule is gone, but studies of day traders in Taiwan and Brazil found that the vast majority lose money. A smaller minimum just means you can start losing with less.