help me to understand the day trade requirements

External question — Personal Finance Stack Exchange Author: peterB Original post: https://money.stackexchange.com/questions/134881 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. I am new to the stock market and the Day Trade. I need your help to clarify some definitions (from Fidelity): "A Day Trade is defined as an opening trade followed by a closing trade in the same security on the same day in a Margin account." " the same security " ---- means the same stock? or it means all different stocks. For example, if I sell stock A and buy A again on the same day will be treated as a Day Trade pattern action, how about if I buy stock A and sell stock A on the same day? If I sell stock A and buy stock B and buy stock C on the same day, do these actions will be treated as a Day Trade pattern? "A Pattern Day Trader designation requires a minimum Margin equity plus cash in the amount $25,000 at all times." " minimum Margin equity " ---- what is this? Does this number come from the broker and tell me how much I can borrow? " a minimum Margin equity plus cash in the amount $25,000 " ---- how to read this section? it is "minimum Margin equity" + "$25,000 cash" or "minimum Margin equity + cash" = $25,000 ? Another post said: The $25,000 amount is for equity in your brokerage account (cash and investments) . The investments here includes the existing settled stocks/mutual funds I bought? For example, If I have an account with $30,000 worth of stocks/mutual funds (on a specific day.) and $20,000 cash, does this meet the $25,000 requirement? I have two accounts (A1 and A2) in the same broker, can I maintain $35,000 cash in A1 and use A1 to meet the $25,000 requirement for A2?

External answer — Personal Finance Stack Exchange Author: Ben Miller Original post: https://money.stackexchange.com/a/134886 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. First, I will point you to FINRA's page Day-Trading Margin Requirements: Know the Rules . It covers all of your questions and more. To answer each of your questions: A day trade is when you buy and sell the same stock on the same day, or if you sell short and then buy on the same day. If you open a position for Stock A and then close at least part of that position on the same day, that is a day trade. It needs to be for the same stock. If you buy shares of stock A and sell shares of stock B in the same day, that is not considered a day trade. Related question: Will this trading activity flag my account as PDT (Pattern Day Trader)? The day trading minimum equity requirement comes from the Federal regulations. Once your account is flagged as a pattern day trading account, you will be required to maintain $25,000 in equity in the account. This amount can be in cash or in "eligible securities." In your example, if you held $20,000 in cash and $30,000 in stocks and mutual funds, you would meet this requirement. Related question: Pattern Day Trade - $25,000 Margin Account Rule You cannot combine the equity in different brokerage accounts to meet the requirements; each account that is flagged as a pattern day trading account must meet the equity requirement in order to be allowed to trade. From FINRA's page: Can I cross-guarantee my accounts to meet the minimum equity requirement? No, you can't use a cross-guarantee to meet any of the day-trading margin requirements. Each day-trading account is required to meet the minimum equity requirement independently, using only the financial resources available in the account.

External answer — Personal Finance Stack Exchange Author: Bob Baerker Original post: https://money.stackexchange.com/a/134888 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Ben Miller provided a lot of good information in his answer. I'd add a few additional points: A day trade is a round trip in an equity or option on the same day (buy then sell or short then cover). Making a day trade isn't a problem. You'll be considered a pattern day trader if you trade four or more times in a rolling five business day period (and your day-trading activities are greater than six percent of your total trading activity for that same five-day period). If you are flagged as a day trader, you must maintain $25k in cash and/or marginable securities at all times. If your account value falls below $25k, it's a violation and you will be restricted from day trading until you deposit cash or marginable securities, restoring the $25k level. Traditionally, Reg T intraday margin for pattern day traders has been 25% (brokers can choose to offer less margin). You could theoretically buy $100k of securities with $25k but that's not a good idea because of the leveraged risk as well as a small fluctuation could lower your account value below $25k. With the expectation of pre-election volatility, a number of brokers increased their pattern day trader margin requirements circa September.