1. Introduction to Stock Trader Types
  2. Stock Traders’ vs. Stock Investors' Roles in the Marketplace
  3. Decision-Making Methods: Informed, Uninformed, Intuitive
  4. Informed Traders: Fundamental Traders, Technical Traders
  5. Swing Traders
  6. Buy and Hold Traders
  7. Value Traders
  8. Trend Traders
  9. KISS Traders
  10. Momentum Traders
  11. Range-bound Traders - Break-out Traders - Channel Traders
  12. Options Traders
  13. Options Seller Traders
  14. Day Traders
  15. Pattern Day Traders
  16. Intra-Day Traders
  17. Intra-Day Scalp Traders
  18. Contrarian Traders
  19. Active and Passive Traders
  20. Futures Traders
  21. Forex Traders
  22. Online Stock Traders
  23. Pivot Traders
  24. News Traders
  25. Noise Traders
  26. Sentiment-Oriented Technical Traders
  27. Intuitive Traders
  28. Price Action Traders
  29. Price Traders
  30. Detrimental Traders
  31. Unsuccessful Types of Stock Traders
  32. Conclusion

Day traders must be careful of establishing patterns. If a day trader makes four or more day trades in a rolling five-business-day period, their account will be labeled as a pattern day trade account. The result of this labeling is that their account will be burdened with some limitations, including minimum equity account levels and more. Account equity refers to the amount of cash that would exist if every position in the portfolio were closed, and it is also known as liquidation value.

A pattern day trader is also defined as one for whom same-day trades make up at least 6% of their activity. They must keep a minimum of $25,000 n their accounts or else they will be denied access to the markets. They are also subjected to limitations as to the total amount that they can trade per day. If they happen to go over that limit, they will receive a margin call with strict requirements and deadlines.

Pattern day trader rules were adopted in 2001 as a means of addressing issues with this mode of trading. The rules by the U.S. Securities and Exchange Commission took effect on February 27, 2001, and they increased the margin requirements for day traders.

Benefits to being a pattern day trader

Those day traders who are able to maintain the minimum balance requirement and abide by the other rules as well will see a number of advantages to being pattern day traders. Increased access to margin can mean increased leverage and greater profits. (For more, see A Guide to Day Trading on Margin)

Non-pattern day traders have standard access to margin, meaning that they may hold positions in value up to twice the amount of cash in their account. Pattern day trading accounts usually have twice the amount of margin when trading stocks. This effect is known as day trading buying power and it is determined at the beginning of each day.

Certainly, with the increased leverage also comes the risk of larger losses. Day traders using borrowed funds can easily lose more than their initial investment.

 


Intra-Day Traders
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