The Pattern Day Trading Rule Is Dead
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For the past 25 years, day traders of stocks and options in the U.S.
needed to have $25,000 sitting in their accounts.
If they didn't, they could only execute three day trades over a five-day period, while making a fourth trade would flag them as a pattern day trader and lock them out of their account.
The PDT (Pattern Day Trading) rule is disappearing today—or at least most of it.Backdrop:The pattern day trading rule was implemented by FINRA in 2001 in response to the dot-com bubble.
Active traders got hit hard during the downturn given the use of borrowed money, or trading on margin.
New requirements were then put in place to fund their accounts in the hope of curbing excessive risk and speculative activity, as well as protecting brokerages from significant losses.
However, critics have taken issue with the rule, saying that it was seemingly based on wealth rather than safety, and it was developed before the advent of zero-commission trading and real-time market access.Under the new system, the $25,000 minimum balance is going away, as well as the old rule that counted trades and the label of a "Pattern Day Trader." Instead, brokers will utilize monitoring infrastructure to look at the actual risk of open trades, and could block overleveraged ones or issue a margin call by the end of a trading day.
It's also a massive win for fast-moving derivatives, as retail accounts can now rapidly buy and sell zero-days-to-expiration (0DTE) options.
| Product | Price | Change |
|---|---|---|
| Brent Crude | $102.14/bbl | +0.34% |
| WTI Crude | $96.90/bbl | +0.21% |
| EN590 Diesel | $846/MT | +0.18% |
| Jet Fuel A-1 | $1090/MT | +0.55% |
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| Bitumen 60/70 | $470/MT | +0.08% |
| Sulphur Gran 99.5% | $470/MT | -0.44% |
| Urea 46% Gran | $650/MT | +1.12% |
| NPK 16-16-16 | $460/MT | -0.28% |
| Nat Gas TTF | $15.42/MMBtu | +0.92% |
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