TradeStation Day Trading

TradeStation Pattern Day Trading (PDT) Limits and Restrictions


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


Pattern Day Trading at TradeStation


Are you interested in day trading? If so, you could open an account at TradeStation. The broker-dealer does have several short-term trading tools. Keep in mind, however, that TradeStation is based in the United States, which means it must enforce the pattern-day-trading (PDT) rule. If you want to know how to legally circumvent the rule, keep reading.


PDT Guidelines from FINRA


FINRA is the body (along with the SEC) that regulates the investment market in the United States. When FINRA creates a rule, broker-dealers in the United States (but not other countries) must adhere to it.

One rule FINRA has promulgated is the pattern-day-trading rule, also known as the PDT rule. The requirement simply states that a PDT account has to maintain equity of $25,000 or more at all times.

And what exactly is a PDT account? Here’s where you need to put on your lawyer hat, because we’re going to discover several loopholes.

- The account is a margin account (and not a cash account)
- The account executes 4 or more securities day trades (of stocks, options, ETFs, or other securities) in a rolling 5-business-day period
- The account’s total day trades make up 6% or more of the account’s total trading activity


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Ways to Evade the Dreaded PDT Flag


Analyzing the exact definition of pattern-day-trading account, we can see multiple ways to avoid the classification.

Use a cash account instead of a margin account to place day trades. Only a margin account can be flagged as a PDT account.

Place 3 or fewer day trades in a rolling 5-business-day period.

Day trade using TradeStation’s simulated trading mode. In practice mode, day trades won’t count against you.

Keep the total day trades in your account under 6% of total trading activity. If you can do this, your account won’t be flagged as a PDT account.

Day trade with an offshore broker. These types of brokers entail increased risk, so be cautious taking this route.


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Keeping Track of Day Trades at TradeStation


If you want to keep track of your day trades, just log into TradeStation 10, the broker’s latest desktop software. Click on Balances, Positions, Orders in the workspace menu. This will generate a new tab of account details.

In the TradeManager window, you will see PDT status, the number of day trades you’ve made in the past 4 business days, and whether your account is qualified to make day trades.


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Day Trading on TradeStation 10


Besides the Balances, Positions, Orders workspace, there is also a Day Trader workspace. This is a default layout with multiple charts and a trade matrix that shows current price with trade sizes and order buttons.


About the Author
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.