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What is Day Trading?
What is Day Trading?
Updated over 2 months ago

What is a day trade?

A day trade is the purchase and sale of the same security on the same business day. On Public, day trades only apply to securities held at Apex, such as stocks, ETFs, and options trades. Crypto, Alts, and Treasuries are not subject to these rules.

What are some examples of a day trade?

Scenario

Day Trade

Thursday: Buy 50 Bookly

Friday: Sell 50 Bookly

No Day Trades

Bought and sold on different business days

Thursday AM: Buy 50 Bookly

Thursday PM: Sell 50 Bookly

1 Day Trade

Bought and sold on the same business day

Thursday AM: Buy 20 Bookly

Thursday PM: Sell 10 Bookly

1 Day Trade

Bought and sold on the same business day; doesn’t matter that the quantity was not the same

Saturday: Buy 20 Bookly

Sunday: Sell 10 Bookly

1 Day Trade

Bought and sold on the same business day, even though two different days

Thursday AM: Buy 50 Bookly

Thursday PM: Sell 25 Bookly

Thursday PM: Sell 25 Bookly

1 Day Trade

Bought and then sold once on the same business day

Friday AM: Buy 50 Bookly

Friday AM: Buy 25 Bookly

Friday PM: Sell 25 Bookly

1 Day Trade

Bought and then sold once on the same business day

Monday AM: Buy 25 Bookly

Monday AM: Sold 25 Bookly

Monday PM: Buy 25 Bookly

Monday PM: Sold 25 Bookly

2 Day Trade

Bought and then sold twice on the same business day

What are some examples related to multi-leg options orders?

Scenario

Day Trade

Order 1: BTO 200 Call
Order 2: STO 210 Call
Order 3: STC 200 Call
Order 4: BTC 210 Call

2 Day Trades

Legged in and legged out on the same day

Order 1: BTO/STO 200/210 call
Order 2: STC 200 Call
Order 3: BTC 210 Call

1 Day Trade

Bought a multi-leg and sold legged out

Order 1: BTO 200 Call
Order 2: STO 210 Call
Order 3: BTC/STC 200/210 call

1 Day Trade

Legged in and closed as a single multi-leg order

Order 1: BTO/STO 200/210 call
Order 2: BTC/STC 200/210 call

1 Day Trade

Bought a multi-leg strategy and closed as a multi-leg

BTO: Buy To Open

STO: Sell To Open

STC: Sell To Close

BTC: Buy To Close

What happens if I day trade?

Pattern day trading rules are defined by FINRA for margin accounts. They do not apply to cash accounts.

Under FINRA regulations, if you are on a margin account, you will be flagged as a pattern day trader (“PDT”) if you make 4 or more day trades within 5 consecutive business days.

If your account is flagged as a PDT and you wish to day trade, you must close the previous business day with at least $25,000 in cash and securities (excluding crypto, alts, treasuries, bond account, or High Yield Cash Account balances). If you continue to day trade and have less than $25,000 in cash and securities in the previous business day, your account will be set to ‘Sell Only’ for 90 days. This means you can close positions you already own, but cannot open any positions. These rules are set by the regulators and Public Investing is required to follow them.

Your brokerage account, the cash and securities value in your account, may fluctuate above $25,000 at some point during the trading day, but under the regulations, we only take into account the closing balance of the previous trading day.

Where can I find my day trade count and PDT status?

In account settings, tap on Margin Account. If your account is a margin account, you will see your day trade count under ‘Day trading & restrictions’. The day trading count will be replaced with Pattern day trader if your account is flagged as a pattern day trader.

In addition to settings, Public will provide you with warnings during the trading flow if the trade you are attempting could trigger a day trade. You will have the opportunity to exit out of the flow prior to executing the day trade.

If I’m flagged as a pattern day trader, can I do anything?

If you’re unable to maintain a portfolio value above $25,000, you can:

  • Reach out to Public’s Member Support team to help you do a one-time, courtesy PDT flag removal. They can only do this once during the lifetime of your account, as regulated by FINRA.

  • Switch to a cash account, since cash accounts aren’t subject to PDT regulation - though there are other limitations for these accounts. Learn more about the difference between margin and cash accounts here.


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