Trading Glossary
The pattern day trader rule, usually shortened to the PDT rule, was a FINRA regulation that restricted how often a trader could day trade in a margin account below $25,000. It's undergoing a major change as of 2026, so the version that applies to your account depends on your specific broker.
Under the rule that's being phased out, a margin account got flagged as a "pattern day trader" account once it executed 4 or more day trades (a same-day round trip: buying and selling the same security) within a rolling window of 5 business days. Once flagged, the account needed at least $25,000 in equity to keep day trading. Fall below that line, and the account was restricted to closing existing positions until equity was brought back up.
The replacement standard doesn't count day trades at all. Instead, brokers monitor each account's actual market exposure during the trading day and require any "intraday margin deficit" to be covered promptly, generally within 15 business days, with stricter consequences if deficits become a repeated pattern. There's no day-trade counter and no $25,000-specific threshold under this version. The general $2,000 minimum to open any margin account at all still applies, but that's a separate, older rule unrelated to day trading.
Firms have an 18-month window to switch over, so a trader's actual status depends entirely on whether their specific broker has completed the transition. A broker's margin disclosures or support line is the authoritative source, not a general assumption about which rule "should" apply by now.
Traders with accounts near the old $25,000 line use this to figure out whether that number still matters for them, and if so, how much cushion they have above it. Traders still under the legacy rule track day trades used in the rolling 5-day window so a stray fourth trade doesn't trigger a restriction they didn't see coming.