The pattern day trader rule: the $25,000 minimum, the four-trade test and FINRA's new intraday margin rule

The pattern day trader (PDT) rule is FINRA’s day-trading margin requirement for US brokerage accounts. A customer who makes four or more day trades within five business days in a margin account is treated as a pattern day trader, must keep at least $25,000 of equity in that account and can trade only within a limit called day-trading buying power. The rule is on its way out: a new intraday margin rule took effect on 4 June 2026, but brokers may keep applying the old one until 20 October 2027.

Because of that overlap, both sets of rules matter in October 2026. This guide explains each, and it does not recommend any broker or strategy.

Where the rule stands in October 2026

FINRA reviewed its day-trading rules from October 2024 (Regulatory Notice 24-13), when most of approximately 65 comments asked it to overhaul or abolish them. It filed its proposal with the SEC on 29 December 2025 as SR-FINRA-2025-017. The SEC approved it on 14 April 2026 (Release No. 34-105226), and FINRA’s Regulatory Notice 26-10 of 20 April 2026 set the terms:

• Effective date: 4 June 2026, 45 days after the notice.
• Phase-in: firms that need more time may phase in the new rule over 18 months, until 20 October 2027.
• What goes: the day-trade count, the “pattern day trader” designation, day-trading buying power and the $25,000 minimum equity, which sat in paragraph (f)(8)(B) of Rule 4210.
• What replaces it: a new paragraph (d)(2), “Intraday Margin”.

FINRA’s rulebook now shows Rule 4210 as amended effective 4 June 2026, without the old day-trading paragraph, and Regulatory Notice 26-11 (19 May 2026) deleted all interpretations of the former requirements. We found no later FINRA or SEC action changing these dates. During the phase-in, FINRA told the SEC that firms may keep applying the old requirements as appropriate, for example account by account, and the SEC’s approval order records that statement. Whether the PDT rule still binds you depends on your broker.

Data from ten firms as of 17 January 2025 showed approximately 1.3 million customers designated as pattern day traders, 2.4% of approximately 54 million margin customers. FINRA left two related rules for later: Rule 2130 on approving day-trading accounts and Rule 2270 on day-trading risk disclosure.

What counts as a day trade, and the four-trade test

Under the old rule, day trading means buying and selling, or selling short and buying back, the same security on the same day in a margin account. Buying a stock on Monday and selling it on Tuesday is not a day trade.

A customer becomes a pattern day trader by executing four or more day trades within five business days. There is one exception in the rule: if those day trades are six percent or less of the customer’s total trades in the five-day period, the customer is not a pattern day trader.

Once designated, a pattern day trader faces four main conditions:

• $25,000 minimum equity. It must be in the account before the customer may continue day trading, and it must be maintained at all times.
• A buying-power cap. The customer may not trade beyond day-trading buying power, explained below.
• No guarantees. Another account’s guarantee cannot be used to meet these requirements.
• A two-day hold. Money deposited to meet the minimum equity or a day-trading call cannot be withdrawn for at least two business days after the close of business on the day of deposit.

If equity falls below $25,000, the customer must restore it before day trading again. Commenters told FINRA that customers held positions overnight they would rather have closed, simply to avoid being designated.

Day-trading buying power and the day-trading margin call

Day-trading buying power is the equity in the account at the close of business on the previous day, minus the maintenance margin required under Rule 4210, multiplied by four for equity securities.

A pattern day trader who exceeds it creates what the rule calls a special maintenance margin deficiency. The broker must then margin the account on the cost of all the day’s day trades, limit buying power to two times the maintenance margin excess and not use “time and tick”, a method that calculates margin trade by trade in the order executed, using the highest open position of the day. The customer receives a special maintenance margin call; if it is not met within five business days, the customer may trade only on a cash-available basis for 90 days or until the call is met.

Example, with hypothetical numbers: a pattern day trader ends Monday with $30,000 of equity and $20,000 of shares held overnight. At a 25% maintenance requirement those shares need $5,000, leaving a $25,000 excess, so Tuesday’s day-trading buying power is 4 x $25,000 = $100,000. Buying and selling $104,000 of stock during Tuesday would exceed that by $4,000 and trigger a day-trading call. Under the new intraday rule the same arithmetic is run on the positions actually open: with $30,000 of equity and the $20,000 holding, buying another $104,000 of shares at once would mean $124,000 of positions needing $31,000 of maintenance margin, a $1,000 intraday shortfall. The ceiling is the same here; the difference is that the new test applies to every margin account, has no $25,000 floor and can use current prices. The illustration ignores Regulation T’s initial margin and house requirements.

How the new intraday margin rule works

FINRA’s investor guidance puts it simply: there is no $25,000 minimum equity requirement for day trading and no designation based on counting trades. Instead, every margin account (other than good faith and portfolio margin accounts) is tested on the days it has a transaction that reduces its “intraday margin level”, the amount of cash that could be withdrawn while still meeting maintenance margin.

• The deficit. If a purchase, short sale, option exercise or withdrawal pushes that level below zero, the largest shortfall of the day is the account’s intraday margin deficit.
• Meeting it. The broker must require the deficit to be satisfied as promptly as possible, by net deposits or by changes that raise the margin level, such as selling positions. A deficit stays outstanding until it is satisfied or until the close of business on the fifteenth business day.
• The 90-day freeze. If a customer makes a practice of not satisfying deficits promptly and leaves one unmet by the close of business on the fifth business day, the broker must stop the account from creating or increasing a debit balance or short position for 90 calendar days or until the deficit is satisfied. Deficits no larger than the lesser of 5% of the account’s equity or $1,000, or ones caused by extraordinary circumstances, do not count toward that practice.
• How brokers check. Firms may monitor accounts in real time and block trades that would create a deficit, compute deficits once at the end of the day, or combine the two.

Two baseline requirements stay. Rule 4210 still requires equity of at least $2,000 to trade on margin, and maintenance margin of 25% of the current market value of long margin securities, which FINRA says must now hold throughout the trading day, not just at the close. Portfolio margin accounts with less than $5 million of equity must carry margin for intraday risk substantially similar to what is required for end-of-day positions.

Cash accounts, options and other products

Cash accounts. The PDT rule defines day trading as trading in a margin account, so it does not apply to cash accounts, and the new intraday rule also covers margin accounts only. Cash accounts have their own limits under the Federal Reserve’s Regulation T. FINRA explains that securities must be paid for in full before they are sold; buying and selling before paying is “free-riding”, which can lead to strict account restrictions. Selling a security bought with unsettled sale proceeds before those proceeds settle is a “good faith violation”. Most US stock trades settle one business day after the trade (T+1).

Options. Options are securities, and FINRA’s secondary estimate of pattern day trading, drawn from Consolidated Audit Trail data, classified accounts by their equity and option day trades. But FINRA also notes that zero-day-to-expiration (0DTE) options trading generally does not qualify as day trading under the old rule. The new rule closes that gap: its definition of a margin-reducing transaction includes option exercises, assignments and the expiration of long options, and FINRA says the requirements will typically cover margin used for 0DTE options.

Other products. Rule 4210 sets margin requirements for customer accounts at FINRA member firms. For how margin calls work in futures, forex and CFD accounts, see our guide to margin calls.

What to check with your broker

• Which regime applies to your account. Until 20 October 2027 a broker may still apply the PDT rule, may have moved to intraday margin, or may run both. FINRA suggests asking your firm.
• How it handles intraday deficits. Real-time blocking stops a trade; an end-of-day calculation lets it through and calls for money afterward.
• House requirements. Firms can set minimum equity and maintenance levels above FINRA’s.

For the basics of borrowing against shares, see the SEC’s investor bulletin on margin accounts, which we republish; for routing, see how a US stock order gets filled.

Frequently asked questions

Has the pattern day trader rule been abolished? FINRA has replaced it. The SEC approved the change on 14 April 2026 and it took effect on 4 June 2026, but brokers that need more time may keep applying the old requirements until 20 October 2027. Check which set your broker uses.

Can I day trade with less than $25,000? Under the old rule, a margin account flagged as a pattern day trader needs $25,000 before day trading continues. Under the new intraday rule there is no $25,000 minimum, though trading on margin still requires $2,000 of equity and the broker can set more.

Does the PDT rule apply to cash accounts? No. It applies to day trading in margin accounts. Cash accounts are limited instead by Regulation T’s payment rules, including free-riding and good faith violations.

What happens if I don’t meet a day-trading margin call? Under the old rule, a pattern day trader who misses a call for five business days is limited to trading on a cash-available basis for 90 days or until the call is met. Under the new rule, repeatedly leaving intraday deficits unmet can lead to a 90-day freeze on new margin borrowing and short positions.