Under these rules, investors will be marked as Pattern Day Traders if they execute more than three day trades in a rolling five trading day period. If marked as a Pattern Day Trader, you may be restricted from making another day trade for 90 days.
To ensure our customers stay safe and on the right side of this regulation, we’ve built a day trade counter into the platform. However, please continue reading this FAQ to familiarise yourself with the details around PDT, which we’ve outlined below.
Important to Note
PDT is a US regulatory (FINRA) rule, not a Stake rule. Therefore, those marked as Pattern Day Traders could face further restrictions beyond the 90 day, day trade restriction, at the discretion of our US broker-dealer, DriveWealth.
Defining a Day Trade
You make a day trade when you buy then sell the same stock/security on the same trading day.
Defining Pattern Day Trading
As mentioned above, traders will be marked as Pattern Day Traders if they execute more than three day trades in a rolling five trading day period. If marked as a Pattern Day Trader, you may be restricted from making another day trade for 90 days.
Exemptions from PDT
Restriction on day trading only applies on account values under $25K, regardless of whether you’re on Stake Black or not. Please note, your account value must be over the $25k for 2-3 full trading days before this exemption is applied.
What if I'm marked as a pattern day trader?
If you are ever marked as a Pattern Day Trader or getting close, you can fund your account above $25K to remove the restrictions. However, you must be able to maintain this account value for the duration of the initial flagged 90 day period.
Stake Day Trade Counter
To keep our customers safe and on the right side of the rules, we’ve built a Day Trade Counter into Stake. This will keep track of all your day trades and notify you when you are on your 3rd day trade in a rolling five trading day period. You’ll always have the right (and given the choice) to make a 4th day trade, but will be warned of the impact this may have.
Day Trading Examples
We get that day trading can be confusing, so here are a few examples.
One Day Trade
Example 1: Buy, Sell
You start with 0 shares of AAPL
Buy 1 AAPL
Sell 1 AAPL
This constitutes one day trade, because you bought then sold AAPL on the same trading day.
Day trade = Buy 1 AAPL, Sell 1 AAPL
Example 2. Sell, Buy, Sell
You already own 100 shares of stock AAPL.
Sell 20 shares AAPL
Buy 10 shares AAPL
Sell 10 shares AAPL
This constitutes one day trade, since you already owned positions the first sell doesn’t count towards a day trade.
Day trade = Buy 10 AAPL, Sell 10 AAPL
Example 3. Buy, Buy, Buy, Sell, Sell, Sell
You currently hold 0 shares of stock AAPL
Buy 5 AAPL
Buy 3 AAPL
Buy 2 AAPL
Sell 1 AAPL
Sell 4 AAPL
Sell 2 AAPL
This is one day trade because there is only one change in direction between buys and sells
Day trade = Buy 5 AAPL, Buy 3 AAPL, Buy 2 AAPL, Sell 1 AAPL
More Than One Day Trade
Example 1. One stock
You currently hold 0 shares of stock AAPL
Buy 100 AAPL
Sell 20 AAPL
Sell 40 AAPL
Buy 10 AAPL
Sell 10 AAPL
This is two day trades as there were two changes in direction.
Day trade 1 = Buy 100 AAPL, Sell 20 AAPL
Day trade 2 = Buy 10 AAPL, Sell 10 AAPL
Example 2. Two stocks
You currently hold 0 shares of stock AAPL and NFLX
Buy 100 AAPL
Buy 20 NFLX
Sell 40 AAPL
Sell 10 AAPL
Sell 10 NFLX
This constitutes two day trades there were two changes in direction.
Day trade 1 = Buy 100 AAPL, Sell 40 AAPL
Day trade 2 = Buy 20 NFLX, Sell 10 NFLX
Example 3. Across multiple days
You currently hold 0 shares of stock AAPL and NFLX
Buy 100 AAPL (Monday)
Sell 40 AAPL (Monday)
Sell 10 AAPL (Tuesday)
Buy 20 NFLX (Wednesday)
Sell 10 NFLX (Wednesday)
This constitutes two day trades as a change in direction within the same day, occurred twice within a 5 trading day period. 5 trade day period = Monday - Friday.
Day trade 1 (Monday) = Buy 100 AAPL, Sell 40 AAPL
Day trade 2 (Wednesday) = Buy 20 NFLX, Sell 10 NFLX
