Day Trading

What is a Day Trader?

FINRA and the NYSE define a Pattern Day Trader (PDT) as one who effects four or more day trades (same-day opening and closing of a given equity security (“stock”) or equity option) within a five business day period.

What is considered a day trade?

Any buy and sell reflected for the same security in the same day. Note: Tax lot associations do not bypass a day trade classification.

Why did I receive a Potential Pattern Day Trader warning?

A potential pattern day trader error message means that an account has less than the SEC required $25,000 minimum Net Liquidation Value AND the number of available day trades (3) has already been used within the last five business days. The Zacks Trade system is programmed to prohibit any further trades to be initiated in the account, regardless of the intent to day trade that position or not. The Zacks Trade system is programmed to protect the accounts with less than $25,000 so the account would not “potentially” be flagged as a day trading account. If an account receives the error message “potential pattern day trader”, there is no PDT flag to remove. The account holder will need to wait for the five business day period to end before any new positions can be initiated in the account.

My account is flagged as a Day Trader. What do I do now?

FINRA has provided brokerage firms the ability to remove the PDT flag from an account once every 180 days. If an account was erroneously flagged, and the client’s intent is not to day trade in his/her account, Zacks Trade has the ability to remove this flag. Once the PDT flag is removed, the client will then be allowed three day trades every five business days. If an account gets re-flagged as a PDT account within 180 days after the reset, the client then has the following options: A. Deposit funds to bring the account’s equity up to the SEC required minimum of $25,000. B. Wait the required 90-day period before any new positions can be initiated. Visit our How-To page to view instructions on requesting a PDT reset.

Where can I see how many day trades I have left?

In ZacksTrade Pro, you can view this in the Account Window. For example, if the window reads (0,0,1,2,3), here is how to interpret this information: If today was Wednesday, the first number within the parenthesis, 0, means that 0-day trades are available on Wednesday. The 2nd number in the parenthesis, 0, means that no day trades are available on Thursday. The 3rd number within the parenthesis, 1, means that on Friday 1-day trade is available. The 4th number within the parenthesis, 2, means that on Monday, if 1-day trade was not used on Friday, and then on Monday, the account would have 2-day trades available. The 5th number within the parenthesis, 3, means that if no day trades were used on either Friday or Monday, then on Tuesday, the account would have 3-day trades available.