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 at a retail brokerage. It matters because violating it can freeze your account or force your broker to liquidate positions. The rule exists to protect less-experienced traders from losing money quickly through frequent trading. For example, if you have $10,000 and make four day trades in five business days, your broker may restrict your account for 90 days. The easiest way around it: either maintain $25,000+ in your account or simply hold stocks longer than one day.