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IBKR Pattern Day Trader (PDT) Rules in 2024
Pattern day trading rules at Interactive Brokers. Pattern day trader PDT requirements and limits for
margin and cash accounts above/below $25,000 balance. How many day trades does IBKR allow?
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Pattern Day-Trading at Interactive Brokers
Interactive Brokers (IBKR) is well-known for catering to professional traders and naturally allows day trading. If you choose to day trade with Interactive Brokers, you must comply with the same regulations as other American brokers. Here are the details:
FINRA’s Pattern Day-Trading Regulations
When day trading with an Interactive Brokers account in the United States, you must adhere to FINRA’s rules for short-term trading. This includes avoiding:
- More than 3 securities trades within a 5-business-day period.
- Day trades exceeding 6% of the account’s total trading activity.
If you break these rules, you'll need to have $25,000 in your account. This amount can be traded, but your account balance must not drop below this level.
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Getting Around FINRA’s Rule
If depositing $25,000 isn’t feasible, you can open a cash account instead of a margin account, as cash accounts aren't subject to the PDT requirement.
Another workaround is to trade assets that are not considered securities, like futures and forex, which are not regulated by FINRA and thus not subject to day-trading rules.
You could also consider swing trading, where you hold positions overnight or longer, up to two weeks. The PDT rule only affects same-day round-trip trades.
Using IB’s Software for Short-Term Trading
Interactive Brokers provides a robust desktop program called Trader Workstation. It includes features such as bracket orders, which are popular among day traders. To use a bracket order, activate it on the trade ticket under the advanced tab by checking the bracket order box. You can then set stop-loss and take-profit orders with your entry order.
The platform also supports other advanced order types that day traders might find useful, like OCO (one cancels the other), hedge, adaptive, and IBALGO.
Trader Workstation also tracks your day trades. To view this, click on the Account tab in the top menu (in Mosaic mode), then select Account Window.
Scroll down to Available for Trading and check for a green minus sign in the far-right corner (not a plus sign). Look for the Day Trades Left entry near the bottom to see how many day trades you can still make before being flagged as a PDT account. On normal trading days, it shows how many trades you have left; in demo mode, it shows unlimited trades.
If you're in live mode with more than $25,000 in your account, the Day Trades Left won't show up because your account isn’t at risk of being flagged as a PDT account.
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Alternative For Traders
For active traders looking for a better option,
Webull is a great alternative to IBKR.
Webull offers no commission on all products, a wider range of cryptocurrencies, higher interest on cash, and user-friendly advanced trading tools.
Webull Promotion
Visit Webull Website
Updated on 8/7/2024.
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.
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