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Robinhood Pattern Day Trading (PDT) Rules. Can I Day Trade on Robinhood App?


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



Pattern Day Trading at Robinhood


Do you have a Robinhood account? Do you want to day trade in it? If so, you’ll have to stay within some important guidelines; otherwise, you’ll have to deposit $25,000 in your account.


How Many Day Trades Does Robinhood Allow


FINRA requires every account classified as a pattern day-trading account to hold at least $25,000 in equity (a combination of cash and securities). This is a FINRA policy, not a Robinhood policy. But Robinhood is a member of FINRA, which means it must enforce it.

And just what is a PDT account? There are three characteristics, and every one of them must be met for an account to be considered a PDT account:

1. A margin account.
2. Places at least 4 day trades of stocks, options, ETFs, or other securities in a rolling five-business-day period.
3. The day trades make up at least 6% of the account’s entire trading activity.

Any account that does not meet all three of these stipulations is not a PDT account, which means it doesn’t have to maintain $25,000 in equity.


Robinhood PDT Protection


Robinhood offers a unique service not found at most brokerage firms. You can add PDT Protection to your account, and Robinhood’s software will prevent you from placing a trade that could cause the account to be flagged as a PDT account.


Robinhood Pattern Day Trading


To enable this feature, tap on the lower-right icon in the menu on the mobile app. It’s in the shape of a person. On the next screen, tap on ‘Account Summary’ and you’ll get a list of account issues.

At the very bottom is information on day trading, including the number of day trades your account has made within the last 5 days. There’s also a link for day trade settings. Tap on this.

On the next screen is information on the broker’s PDT Protection program. A toggle switch lets you turn this feature on and off.


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Methods to Circumvent the PDT Rule


If you decide to leave PDT Protection off, you’ll need to deposit $25,000 in your account or take at least one step to avoid PDT classification.

Every brokerage account at Robinhood is opened as a margin account. It is possible to downgrade to a cash account, and doing so would eliminate the $25,000 requirement straight away. As we saw above, only a margin account can be classified as a pattern-day-trading account.

If you do decide to day trade in a cash account, keep in mind that you won’t be able to trade with unsettled funds. In the U.S., stocks settle 2 business days after the trade date.


Better Broker For Traders


For traders that are active, a good option to consider would be Webull. This platform has a number of advantages over Robinhood: virtual trading, better app, and advanced trading platform.

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