The day trader rule, known as the pattern day trader (PDT) rule, was a FINRA rule that required any client identified as a repeated intraday trader to hold at least $25,000 in their US margin account. It applied once a client executed four or more day trades within five business days, provided those day trades exceeded 6 percent of the client’s total margin transactions over that same period, according to the definition published by Investor.gov, the investor education site of the Securities and Exchange Commission.
This day trader rule only applies to margin accounts opened with a US broker regulated by FINRA. It does not apply to a simulated trading account at a prop firm such as WeGetFunded, where the displayed capital is not a real deposit and where risk thresholds follow the firm’s own rules, for example the trailing end-of-day drawdown or the daily PNL consistency rule.
How FINRA counted day trades to designate a pattern day trader
A day trade is defined as buying then selling, or short selling then buying back, the same security during the same session. A client became a pattern day trader as soon as they executed four or more of these within five consecutive business days, and that volume represented more than 6 percent of all their margin transactions during that window, as specified by Investor.gov. This double criterion, frequency and proportion, distinguished an occasional trader from a structurally intraday trader in the eyes of the broker.
Once the designation was set, the broker had to require a minimum equity threshold and restrict the activity to a margin account, never a standard cash account.
The $25,000 threshold and its effect on buying power
Under FINRA rules, a client designated as a pattern day trader had to maintain at least $25,000 in their account and could only trade on a margin account, as noted by Investor.gov. If the account’s equity fell below this threshold, the broker suspended day trading activity until the minimum amount was restored, which could freeze entire strategies for several sessions, regardless of the type of market order or stop-limit order used to execute the trades.
The replacement of the rule by FINRA intraday margin
FINRA has adopted new intraday margin standards intended to fully replace the former day trading margin rule, including the day trade count used to designate a pattern day trader and the $25,000 minimum threshold, according to Regulatory Notice 26-10 published by FINRA. The effective date of the amendments is June 4, 2026, forty five days after the notice’s publication, with a phased compliance period that can extend until October 20, 2027 for member firms that need it, the same notice specifies.
This change does not eliminate the concept of a margin requirement for intraday activity: it replaces a fixed threshold and a flat transaction count with a margin calculation directly tied to the account’s actual intraday risk, computed by each member broker according to its own implementation schedule.
| Item | Value | Date |
|---|---|---|
| Day trade threshold triggering the PDT designation | 4 or more day trades in 5 business days | Historical FINRA rule |
| Minimum share of day trades in margin transactions | more than 6 percent | Historical FINRA rule |
| Minimum equity required once designated PDT | $25,000 | Historical FINRA rule |
| Effective date of the new intraday margin standards | Full replacement of the PDT rule | June 4, 2026 |
| End of the phased compliance period | Up to 18 months for affected member firms | October 20, 2027 |
Frequently asked questions about the day trader rule
What is a pattern day trader according to FINRA?
It is a client who executes four or more day trades within five business days, provided those trades represent more than 6 percent of their margin transactions during that same period, according to the Investor.gov definition. This designation automatically triggered the broker’s enhanced margin obligations.
Why was $25,000 required in the account?
FINRA rules required this minimum equity threshold once a client was designated a pattern day trader, and restricted their activity to a margin account only. Below this amount, day trading could be suspended by the broker until the threshold was restored.
Does the PDT rule still exist in 2026?
Not in its historical form: FINRA has adopted new intraday margin standards that fully replace the former rule, including the day trade count and the $25,000 threshold, with an effective date of June 4, 2026 and a possible phased compliance period extending until October 20, 2027.
Does this rule apply to a simulated trading account at a prop firm?
No. The PDT rule and its replacement by FINRA apply exclusively to margin accounts opened with a US broker regulated by FINRA. A simulated account at a prop firm follows separate internal rules, which have no regulatory connection to these intraday margin standards.