Pattern Day Trader

AAA

DEFINITION of 'Pattern Day Trader'

An SEC designation for traders who trade the same security four or more times per day (buys and sells) over a five-day period, and for whom same-day trades make up at least 6% of their activity for that period.

INVESTOPEDIA EXPLAINS 'Pattern Day Trader'

An individual deemed a pattern day trader must hold a minimum of US$25,000 in equity in his or her account before being allowed to day trade. This $25,000 equity amount must be maintained in the account at all times because it addresses the additional risks inherent in leveraged day-trading activities and ensures that customers, before continuing to day trade, cover any losses incurred in their accounts from the previous day.

RELATED TERMS
  1. Serial Correlation

    The relationship between a given variable and itself over various ...
  2. Head And Shoulders Pattern

    A technical analysis term used to describe a chart formation ...
  3. Institutional Investor

    A non-bank person or organization that trades securities in large ...
  4. Day Trader

    A investor who attempts to profit by making rapid trades intraday. ...
  5. Leverage

    1. The use of various financial instruments or borrowed capital, ...
  6. Trade

    A basic economic concept that involves multiple parties participating ...
Related Articles
  1. How To Outperform The Market
    Trading Strategies

    How To Outperform The Market

  2. An Introduction To Day Trading
    Active Trading Fundamentals

    An Introduction To Day Trading

  3. What qualifies a person as a day trader?
    Investing

    What qualifies a person as a day trader?

  4. Playing Penny Stock-Like ETFs
    Stock Analysis

    Playing Penny Stock-Like ETFs

comments powered by Disqus
Hot Definitions
  1. Ghosting

    An illegal practice whereby two or more market makers collectively attempt to influence and change the price of a stock. ...
  2. Elasticity

    A measure of a variable's sensitivity to a change in another variable. In economics, elasticity refers the degree to which ...
  3. Tangible Common Equity - TCE

    A measure of a company's capital, which is used to evaluate a financial institution's ability to deal with potential losses. ...
  4. Yield To Maturity (YTM)

    The rate of return anticipated on a bond if held until the maturity date. YTM is considered a long-term bond yield expressed ...
  5. Net Present Value Of Growth Opportunities - NPVGO

    A calculation of the net present value of all future cash flows involved with an additional acquisition, or potential acquisition. ...
  6. Gresham's Law

    A monetary principle stating that "bad money drives out good." In currency valuation, Gresham's Law states that if a new ...
Trading Center