Pattern Day Trader at Charles Schwab
If you have a brokerage account with Charles Schwab, you must keep $25,000 in the account if it is marked
as a pattern day trading account. There are several ways to avoid that, however.
This article will show you how to day trade—legally—without needing to keep $25,000 in your
account.
U.S. securities regulators have this well-known rule. It is called the PDT rule, and it
requires any brokerage account that meets the definition of a pattern day trading account
to have at least $25,000 in account equity in order to keep day trading. PDT accounts that do not meet the $25,000 minimum can be restricted. And that would not be good at all.
Even though this is not Schwab’s rule, the broker must follow it because it is required to follow securities laws.
Schwab PDT Rule Justification
Why would regulators create this rule? They believe it helps protect investors from the risks of day trading. The idea is that only experienced traders would have $25,000 available to keep in a brokerage account.
Schwab PDT Rule Details
Luckily, there are several ways to avoid the PDT rule. Here is how the rule is defined:
I. The account must place at least 4 day trades (of stocks, options, ETFs, or other securities) in a rolling five-business-day period.
II. The account must be a margin account.
III. The account’s day trades must make up at least 6% of the account’s total trading activity.
Any account that does not meet even one of these three rules is not a PDT account and does not
need to meet the $25,000 requirement.
Free Charles Schwab Account
Strategies for Avoiding the PDT Rule at Schwab
The first rule is making 4 day trades. If an account makes fewer than this, it is not a PDT
account and does not need to keep $25,000.
You can also open a cash account
instead of a margin account, which avoids the PDT rule. And finally, you can
keep your day trades below 6% of your total trades.
Schwab Day Trading Tools
Website
Schwab offers many helpful trading tools, and all of them are free. First is the broker’s website, which can place trades for many types of securities, including stocks, options, ETFs, and fixed-income products.
There is a trade bar at the bottom of the screen. It shows market indexes and trading data for a selected ticker symbol.
However, trades cannot be placed there. If you click on the trade link, you will be taken to a web page where you can place the order.
What we really liked about Schwab’s trade bar was the ability to show a small pop-up chart with several time frames.
Full charts on the website include technical indicators, drawing tools, comparisons to other securities, and company events. What really
disappointed us was that the chart cannot be expanded to the full width of the screen.
thinkorswim
If you need more advanced tools, you can download and install thinkorswim
for free. This powerful program has much better charts than the website. Charts can be shown full screen, and colors can be changed. Price history can be set to show every tick.
One feature we really liked on Schwab’s platform during our test was the Trade & Probability calculator built into the order ticket. It shows possible profit and loss at different dates, which you can adjust.
Other helpful tools on the platform include Recognia for technical analysis, a stock screener, and CNBC business news. thinkorswim also offers direct-access routing.
Free Charles Schwab Account
Mobile App
If you are often on the go, like many investors today, you can manage your account and trade with Schwab’s easy-to-use mobile app. It has many useful features, including bill pay, check deposit, and money transfers.
All of your Schwab accounts, including bank, futures, and brokerage accounts, appear after one login in the app. Tapping on an account opens a page that shows holdings and a bubble chart of the day’s gain or loss.
The trading ticket on the app lets you place orders for mutual funds, which is helpful because not all apps offer this. Stocks, options, and ETFs can also be traded.
Updated on 1/15/2026.
Chad Morris is a financial writer with more than 20 years experience
as both an English teacher and an avid trader. When he isn’t writing
expert content for Brokerage-Review.com, Chad can usually be found
managing his portfolio or building a new home computer.
|