Pattern day trader (PDT) rule

Definition

The PDT rule (FINRA 4210’s day-trading provisions) flags any MARGIN account that executes four or more day trades within five business days (when those trades exceed 6% of total activity) as a “pattern day trader” — and requires such accounts to maintain $25,000 minimum equity. Below the minimum, day trading is blocked until restored. Facts, never advice: the rule shapes which strategy cadences are mechanically available to which accounts, so the engine gates strategy eligibility on it.

How it works / structure

• The definitions (engine-executable): a DAY TRADE is opening and closing the same security (including options) in the same session in a margin account; the counter runs on a rolling five-business-day window; the 6%-of-activity qualifier exempts high-volume accounts making few day trades.
• The consequences: PDT-flagged accounts under $25k equity are restricted from day trading (positions may still be closed); day-trading BUYING POWER for flagged accounts above the minimum is 4x maintenance excess (higher than the 2x overnight standard) — the rule both restricts and, above threshold, extends intraday leverage; day-trading margin calls follow their own schedule.
• The perimeter (facts that route around it): CASH accounts are outside the rule (but bound by settlement — free-riding rules make cash-account day-trading cadence a settlement-math exercise, acct-settlement); FUTURES are outside FINRA’s rule entirely (ms-futures-margin — one documented reason small accounts gravitate to futures for intraday strategies); the flag itself is broker- discretionary in application and sticky once applied.
• Engine gating: account type + equity + rolling day-trade count determine which strategy cadences (strategy-day-trading-styles) an account may execute; the gate is mechanical.

When it applies

Strategy-eligibility computation for every account below or near $25k; cadence design (a strategy generating 4+ same-day round trips per week is PDT-bound by construction); venue selection honesty (the futures alternative exists with its own leverage physics — routing to escape PDT does not escape risk).

Risk profile & failure modes

• Restriction cascades: an account dipping below $25k mid-week loses day-trading ability at the worst moment (mid-strategy) — buffers above the threshold are the structural answer.
• 4x intraday leverage: the rule’s less-quoted half EXTENDS leverage for flagged accounts — capacity, not guidance (acct-margin-rules doctrine).
• Workaround drift: splitting capital across brokers or misusing cash accounts to evade the flag violates the rules’ intent and typically ends in broker restrictions — the platform models the rule, never routes around it.
• The rule as strategy filter: the documented economics of high-frequency retail day trading are poor (strategy-day-trading-styles evidence) — the rule’s friction is not the binding reason most such strategies fail replay.

Evidence & limits

The rule text is FINRA 4210 (cited); SEC investor materials document the definitions. Broker application details (flag removal policies, intraday call handling) vary — per-broker data, refreshed. No claim is made about the rule’s wisdom; the engine treats it as environmental fact.

Falsifiable-thesis examples

Illustrations only, not signals:

• “This account’s planned strategy cadence stays under 4 day trades per rolling 5-day window (PDT-avoidance audit)” — falsified by the simulated trade calendar.
• “Strategy S, forced to a sub-PDT cadence, retains at least 70% of its unrestricted replay return (cadence- constraint cost)” — falsified by the paired replay.

Cross-references

• The parent rulebook: acct-margin-rules
• The strategies it gates: strategy-day-trading-styles
• The cash-account alternative’s own math: acct-settlement
• The futures perimeter: ms-futures-margin
• Account-type context: acct-account-types