What is Pattern Day Trading?
Pattern Day Trading can be simply defined as when a trader carries out a day trade four or more times in five business days.
What is a Day trade?
A day trade is when a buy and sell order of the same stock is executed in one trading day.
Who is a Pattern Day Trader?
A Pattern Day Trader (PDT) is an individual that completes 4(four) “day trades” within a rolling 5-business day period.
A trader is not allowed to buy and sell the same company's stocks more than 4 times within 5 consecutive business days.
For example:
As a trader, if you buy Netflix stocks on Monday and sell it on that same day, that's called a day trade. If you carry out the same action(for Netflix or any other company) on Tuesday and Wednesday, you would have used up all your day trades (3-day trades).
If you then try to buy and sell Netflix(or any other company's) stock again within the 5-business day period (i.e Thursday and Friday), your account would be flagged for Pattern Day Trading and subsequently banned from trading stocks on Chipper for 180 days.
Do you need further assistance?