Day Trading Rules

How day trading rules will affect you as an investor depends largely on how you are categorized as a trader. If you make, or are planning to make four or more day trades within a five-day period, or day trading surpasses six percent of your total trading activities, you may be classified as a Pattern Day Trader (PDT), which carries different regulations than general trading. New investors may be classified as PDTs immediately if they have received training solely in day trading.

Prior to 2001, day traders were allowed to open margin accounts with a $2,000 initial investment. However, as of September 2001, the trading rules stipulate that day traders are required to put up a $25,000 investment in order to open a margin account. On the positive side, the new rules also state that PDTs are allowed twice the buying power as before.

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