PDT Rule (Pattern Day Trader)

The PDT Rule is a regulation that requires brokerage accounts with less than $25,000 to limit day trading—buying and selling the same stock within a single trading day. You'll run into this if you're an active trader using a regular brokerage account. It matters because violating it can get your account frozen or restricted. The rule exists to protect newer investors from losing money quickly through frequent trading. For example, if you buy 100 shares of a tech stock in the morning and sell them that afternoon, that counts as one day trade. Make four or more day trades in five business days with under $25,000, and your broker will flag you as a pattern day trader, limiting your trading until you deposit more cash.