What is a "Pattern Day Trader"?
A Pattern Day Trader (PDT) is someone who makes four (4) or more day trades within a five (5) business day period, as defined by FINRA (Financial Industry Regulation Authority). Traders who exhibit this pattern of day trading are thereafter subject to the PDT restrictions.
If you effect a Day Trade, you will be given a Potential Pattern Day Trader notification warning which will identify how many Day Trades you have and how many Day Trades you have remaining before you are deemed a Pattern Day Trader. It will also spell out the requirements and rectification that you will be allowed to exercise should you be tagged as a “Pattern Day Trader”.
The account holder can wait for the five-day period to end before any new positions can be initiated in the account to avoid being designated a “Pattern Day Trader”.