What are "Day Trades" and how are they counted?

A day trade is buying and selling the same security on the same day in a margin account. Day trades are counted based on the opening transaction and whether that opening transaction was closed out on the same day. Partial fills are not counted as multiple trades on the opening or closing side. However, if part of your order fills, and then you modify it and the rest fills, that may be counted as two day trades.

Examples of day trading:

  • On Tuesday, 100 shares of XYZ stock are purchased. Later on that same day, 100 shares of XYZ stock are sold. This is considered to be a day trade.
  • On Monday, 10 shares of XYZ stock are purchased. Later on that same day, 5 shares of XYZ stock are sold. This is considered to be a day trade.
  • On Thursday, 50 shares of XYZ stock are purchased. On Friday, another 50 shares of XYZ stock are purchased. Later on that Friday, 50 shares of XYZ stock are sold. This is considered to be one day trade.
  • On Wednesday, 100 shares of XYZ are purchased. Later that same day, you sell 50 shares of XYZ and before the market close you sell another 50 shares of XYZ. This is one day trade. In this case, even though you sold your 100 shares of XYZ in two separate transactions, it still counts as one day trade because one single opening transaction was closed out.
  • On Monday, 50 shares of XYZ are purchased. Later that day, another 50 shares of XYZ are purchased. Before the market close on Monday, 100 shares of XYZ are sold. This is two day trades. Here, we have two opening transactions closed by a single sell order. The first group of 50 shares of XYZ was bought and sold on the same day, and a second group of 50 shares was also bought and sold on the same day.
  • On Friday, you put in 2 buy orders of 50 shares of XYZ. You then sell 51 shares of XYZ later that day. This is also two day trades. All 50 shares from the first opening transaction were bought and sold on the same day. One share from the second opening transaction was bought and sold on the same day. Even though only one share from Order 2 was sold, the purchase and sale of that single share in a single trading day counts as a day trade.
  • On Wednesday, 3 orders are made: Buy 2 shares of XYZ, Buy 5 shares of XYZ, and Buy 50 shares of XYZ. Later that same day, an order to Sell 50 shares of XYZ is made. This is three day trades. We pair the closing transaction with the opening orders during that trading day, beginning with the earliest time of execution. This means you closed out all of opening Order 1, all of opening Order 2 and part of opening Order 3, resulting in three day trades.

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