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Interactive Brokers Pattern Day Trading (PDT) Rules. Can I Day Trade on Interactive Brokers?


Pattern day trading rules at Interactive Brokers. Active trader PDT requirements for margin and cash accounts above/below $25,000 balance. How many day trades does IBKR allow.



Pattern Day-Trading Accounts at Interactive Brokers


Because Interactive Brokers (IBKR) caters to professional-level traders, it probably comes as no surprise to you that the firm permits day trading. If you do decide to day trade at Interactive Brokers, you will have to follow the same rules that other American brokers enforce, though. Here are the details:


FINRA’s Pattern Day-Trading Regulations


If you’re day trading with an Interactive Brokers account that is based in the United States, you will have to follow FINRA’s guidelines for such short-term trading. This means avoiding the following infractions:

Placing more than 3 securities trades within a 5-business-day period.

Having day trades that exceed 6% of the account’s trading activity.

If you violate either of the above rules, you will need to deposit $25,000 in your account. You can trade with this money; just make sure your account equity stays above that level.


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Getting Around FINRA’s Rule


If you can’t deposit $25,000, you can always open a cash account instead of a margin account. Cash accounts aren’t subject to the PDT requirement.

Another way around FINRA’s pattern-day trading regulation is to trade assets that aren’t considered securities. Futures and forex, for instance, fall outside of FINRA’s regulatory authority. Therefore, they aren’t subject to day-trading rules.

Or you could swing trade. This means you enter a position and then exist the next day or some point in the next two weeks. The PDT rule only applies to round-trip trades on the same market day.


Using IB’s Software for Short-Term Trading


Interactive Brokers has a great desktop program called Trader Workstation. It offers the ability to place bracket orders, which are often used by day traders. To use a bracket order, simply click on the advanced tab on the trade ticket and put a check mark in the box for bracket order. You’ll then be able to enter stop-loss and take-profit orders along with your entry order.

The broker’s trade ticket has other advanced orders that day traders may want to use, including OCO, hedge, adaptive, and IBALGO.

Trader Workstation automatically keeps track of your day trades. To view this information, click on the Account tab in the top menu (in Mosaic mode) and then select Account Window.

Scroll down to Available for Trading and make sure there is a green minus sign in the far-right corner (not a plus sign). Near the bottom of entries will be Day Trades Left.

This tells you how many day trades you have left before your account becomes flagged as a PDT account. Besides the current market day, the numbers will also tell you how many day trades you have left on upcoming market days.

In our screenshot below, the software tells us that we have unlimited day trades left. That’s because we were in demo mode when we performed our research. In this mode, you can day trade as much as you want.


IB Day Trading


If you are in live mode, and you have more than $25,000 in account equity, the Day Trades Left entry will not appear because your account can’t be flagged as a PDT account.


Alternative Broker For Traders


For active traders a good alternative broker is Webull. It has a number of advantages over IBKR: $0 commission on all products, and easier to learn advanced trading tools.

Continue to Webull Review


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