What is the Day trading? 🧐
In general, you can make an unlimited number of trades on the platform.
A day trade occurs when you buy and sell the same stocks on the same trading day.
Trading day = Market hours + Extended market hours (after and before the market).
For example, if you purchase 5 shares of Apple and then decide to sell 3 shares of Apple on the same trading day, that is considered a day trade. The number of shares is irrelevant, as long as you are buying and selling the same stock within one trading day, it is considered a day trade.
When will you be a day trader? 🥶
You become designated as a pattern-day trader once you have completed 4-day trades within a rolling five-day period. As per the Financial Industry Regulatory Authority (FINRA), we restrict you from becoming a pattern-day trader unless you hold a $25,000 minimum equity balance in your InvestSky account.Examples of 3-day trades:
I bought Amazon shares and sold part of/all of them = Day Trade 1
I sold and bought Apple shares = Day Trade 2
I bought and sold Amazon shares again = Day Trade 3
Each daily trade is made available again after 5 business days. The portfolio has an indicator showing the number of daily trades made in the account and when they ended after 5 business days.
What will happen If you become a day trader? And how to avoid it? 🤔
If you have completed 3-day trades within five days, you cannot complete the 4th.
How can I day trade? 🤓
If you want to day trade without restrictions, you will need to have a $25,000 minimum equity balance in your InvestSky account at all times as per regulations.
Note: Once your account is funded with $25,000 or reaches the same balance (according to the SEC), you will be able to proceed with unlimited day trades from the second business day and not the same day on which the deposit or balance was increased.
That being said, you would be able to place the order the following trading day, as it would then not be considered a day trade. 😉
Pattern day trading rule applies to all brokers regulated by FINRA (Financial Industry Regulatory Authority).
Any questions? 💬 Talk to us! 🥰 You can reach us at [email protected] or chat with us directly in the app (Account > Support > Chat With Us).