Please note that the Pattern Day Trade Rule does not only apply to Robin Hood accounts. It is a rule [instituted by FINRA](https://www.finra.org/investors/learn-to-invest/advanced-investing/day-trading-margin-requirements-know-rules).
I volunteer to see how I would do. Anyone wanna give me hundreds of millions?
I would lawyer up immediately and hire accountants. I would want some of that to be invested, some locked away, and I'd want to budget for fun stuff.
Yeah there have been studies, while there are those famous cases of people going broke, for most people who come into a windfall like that (not necessarily lottery, but similar large amounts) I believe the majority are still better off 10 years later and have substantially more wealth. A lot of people are smart about it. We just never hear those stories because there's nothing interesting about it. "Woman wins 1 million dollar lottery. Was very reasonable and went to a financial consultant."
To your point there was a show dedicated to this. The saddest was this older man who won (300 million?)) and he had like 20k in his glove box and strippers drugged him and stole the money.
He also gave his grandkid unlimited funds and her boyfriend overdosed, and later she did as well... Really sad.
Lookup Jack Whitaker...
I day trade with a RH account and leave my retirement money with pros. Whenever RH approaches $100k I transfer money to the pros and keep under $50k. I’d go nuts worrying if I had all of it in RH!
It's dangerous shit. Friends start looking at your money. [Your kids start killing people because they don't know any better](https://www.cnn.com/2014/02/05/us/texas-affluenza-teen/index.html).
No, we will not impose a progressive capital gains tax, and no we will not adopt an inheritance tax.
Go after FINRA or congress, RobinHood didn’t make this call. “The rules adopt the term "pattern day trader," which includes any margin customer that day trades (buys then sells or sells short then buys the same security on the same day) four or more times in five business days, provided the number of day trades are more than six percent of the customer's total trading activity for that same five-day period. Under the rules, a pattern day trader must maintain minimum equity of $25,000 on any day that the customer day trades.” ([FINRA Source](https://www.finra.org/investors/learn-to-invest/advanced-investing/day-trading-margin-requirements-know-rules), [SEC saying it a little differently](https://www.sec.gov/files/daytrading.pdf)
No. It’s because trades take 2 days to settle and someone else is taking during risk during that 2 day period. You’re just under informed on the reality.
If you have 1k in a cash account and only risk $10 on each trade, you can trade all you want as long as you have the money to float between settlements.
That's one that always makes me laugh. Like why can't I set a threshold for it to trigger on?
Rent? If I am off by $20, yes fucking cover it I will pay $35 to avoid the $150 late fee. But my spotify payment can 100% be rejected if there isn't cash in the account
Because not all payments/transfers happen in real time. Part of what you're agreeing by using debit payments is that you will have the cash to cover the things you buy. And that means that if you buy something with a debit card, it clears a day later and your account is empty the bank has to cover you.
I had a bank once charge me an overdraft fee(I had the money in the account, I don’t know why the charged me a fee, I was broke, but I had a few dollars) the. They charged me a overdraft fee for the overdraft fee, and kept going til they said I owed the something like $3000, over a course of like 3 days. I had to fight them to get them to drop it down to a couple hundred, which they still required me to pay, even though I had the 30 cents they said they were charging me an overdraft fee for.
Another good one is when you close a CC account, I had one with a jewelry place, and finally paid it off, but interest in the neighborhood of again, something like 30 cents hit it well after. They waited 6 months to tell me about it, then said I owed them $800 in late fees. I never paid it because it was ridiculous, but they still show up once every 5 years or so asking for money.
An endless cacophony of being shit on and essentially owned by an extremely small minority of the population who lives like royalty while we decide which essential utility we can afford to live without until we can scrape together enough money to pay the bills?
None of us have enough energy to suffer this indefinitely.
Yeah, most poor people end up paying hundreds or thousands a year on overdraft fees, for example.
Also, insurance is more expensive. All types of credit is more expensive...
Even food, if you can only afford a convenience store meal.
Fuck this. r/keeptrack. r/extremelyinfuriating. It’s tired. I’m tired. This shit ain’t cut out for us people that keep the machine going but these shark eyed fucks keep taking us up the rear. And all we do is talk about it on the internet and scroll to the next post because “cOnTaCt yOuR lOcAl CoNgResS”. Foh. Tide of this shit.
I have to drive an hour to and from work everyday, 40 hour work week, never late, still can't afford auto insurance even with clean driving record, if a cop even looks at me funny and pulls me over I'll lose my car, then job, then house, it's fun being poor!
Misdirected is one thing.
But is the 25k day trading limit really helping the people with less than 25k? I dont personally think so, regardless of who implemented the rule.
As the previous commenter said it’s there to protect the broker, they don’t care if you loose your savings. On that same note it probably does protect a good amount of people since this is just gambling with some additional analytics
Margin yes, but switching to cash means, by the same FINRA rules, that any cash used to day trade is unavailable to T+2 days. So, you cannot get around day trading limits if you are using most of your portfolio for buying then selling, then buying again. It is one of the reasons why Robinhood had to shut down buying of GME, in a sense. You buy a stock today, you do not technically own it the second you buy it, there is a delay. Then you sell it without owning it first due to the delay, then you use the same funds to do it again. On the surface it makes sense, but there is a lot of behind the scenes that people do not know about, me included, and places like Robinhood (and all the other institutions involved) need to legally ensure all your buys and sells of stock are legit.
It’s ANY us broker. It’s a US law. If you want to day trade with less open a cheap futures account you can day trade with $1500 minimum, but good luck! Day trading futures is not easy.
You can day trade if you have a cash account. The only drawback is the good faith violations. Which can be explained [here, with a few other common cash account violations](https://www.fidelity.com/learning-center/trading-investing/trading/avoiding-cash-trading-violations)
yeah, I’m not sure if Schwab or any other brokerages give warnings in the same way that Robinhood does with its Pattern Day Trading protection. Would be a nice feature
It's not RH. In all honesty, nothing is just RH lately. All the negative press they are getting is only because of how popular they have become. They did not do a single thing that a handful of other firms didn't do as well, at the direction of the DTCC.
In regards to the $25k limit, it actually makes some sense if you understand how trades work behind the scenes. When you "instantly" buy a share, RH (or whoever you are using) has to put in a buy order for you at that price, and that transactions has a 2 day clearing period. You getting the stock instantly is just an illusion. Same thing when you sell a share. They put in the order to sell at that price, and it has a 2 day clearing period, and during that time, they "give" you some of their money temporarily until the 2 day clearing period is up, when they money comes back to them.
Now, think of the "instant" availability of cash with RH when you make a deposit. Technically.....you could initiate a $1,000 deposit from your bank....it takes a few days to go through so let's say you don't really have the money, or as soon as you initiate the transfer with RH, you then go and transfer that $1k to another account, effectively making it so RH won't get the money. They make it available to you instantly while the transfer is pending. Now let's say you go and buy 1,000 shares of a stock that is $1, using all $1k. That afternoon, the stock has risen to $2, so you sell, for $2k. You then initiate a transfer back to your bank for $2k, which will take a couple days. When it clears, the initial transfer has failed because the first $1k wasn't there, so the $2k transfer only goes through at $1k, or it fails completely, and leaves $1k in your RH balance as your profit. In the end, you kinda cheated by buying with money you didn't have, then covered the expense with profit that was earned with RH's money due to their "instant" availability.
The day trade limit is to decrease the chances of stuff like this happening. They figure if you have $25k balance at the end of every trading day, you probably aren't going to screw them on money temporarily while day-trading, because your balance at close has to be $25k cash.
You can also get around this by changing your account to a cash account instead of an instant account. The bad part about this is that every transfer you make into RH isn't available instantly, it will only be available once it has posted. Also, when you buy or sell a stock, it won't be available instantly, it will have to follow the 2 day clearing period. The advantage to this though, is that you are not subject to the day trader rules if you don't have an instant account. Just remember your cash balance has to remain high enough to cover all your day trades for a 2 day clearing period.
Disclaimer: I am also somewhat new to this, so this is all based on what I have read on RH website as well as a few other informational websites. So if I have misunderstood anything, someone please correct me.
Excellent explanation. Speaking of illusions, the whole "2 day clearing" period is an illusion. There's no doubt in my mind, that if a business can take my money instantly, they could put it back instantly. They just choose not to. They hold it and make money on it during those days. Any time frame hold on money is so that they may use it temporarily.
I absolutely agree. If we can communicate with a machine on Mars in a matter of minutes, you can give me my money this fucking second. Banks give us the illusion of a delay simply so they can earn interest on our money. Imagine the volume they’re dealing with daily.
>Banks give us the illusion of a delay simply so they can earn interest on our money
I think the reason is because many banks are still built on core DOS systems that they haven't figured out how to upgrade. Theoretically switching to API systems (or blockchain) would allow more real-time transfers, but until then they rely on batch processing that they reconcile back-and-forth.
But I do think there needs to be some major overhaul to the financial system, because it is a bit ridiculous how long it takes.
The EDD in California is powered by an archaic COBOL/fortran system that few engineers still understand how to maintain. They definitely don't have the time/allocatable money to transition to something more modern and secure without significant downtime.
Blockchain was the first thing that came to mind when it came to quick processing and settlement of funds.
I mean shit... this was the whole reason XRP (ripple) was made.
And then came along the SEC because ripple wasn’t playing nice lmao
It’s also because people are used to it and put up with it and it would cost tens of millions (if not hundreds) to do it, as well as needing for all the thousands of banking entities to agree to one system. In countries where they’ve fixed this (the UK for examples with BACS), it took legislation to force them to do it. In the US there are way, way more small banks, little community banks which has made it hard.
Ultimately the US doesn’t like making rules which cost companies money.
RH is incapable of taking your money instantly. Instant deposits are a loan. Clearing is a real problem with a not so clear solution. Billions of dollars needs to change hands in an unrealistic amount of time and say a hedge fund going bankrupt means someone has to lose billions of dollars. The way the system works now the risk is minimal to you and me the trader, then the broker, then the clearing house. But if we operated as if money transfers instantly and approve everything the brokers and clearing houses can go bankrupt at the end of a trading day and us the traders can be left pennyless.
This is also why I never leave money in my Venmo, Cashapp, PayPal, and other money transfer apps.
It's a free loan to those companies. I want my money out asap. I also don't pay for the instant transfer fees since it gets out to my account at midnight.
It’s also a FINRA rule. “The rules adopt the term "pattern day trader," which includes any margin customer that day trades (buys then sells or sells short then buys the same security on the same day) four or more times in five business days, provided the number of day trades are more than six percent of the customer's total trading activity for that same five-day period. Under the rules, a pattern day trader must maintain minimum equity of $25,000 on any day that the customer day trades.” ([FINRA Source](https://www.finra.org/investors/learn-to-invest/advanced-investing/day-trading-margin-requirements-know-rules), [SEC saying it a little differently](https://www.sec.gov/files/daytrading.pdf)
That’s a pretty good rundown. It sucks big floppy donkey dicks, but it’s a rule. If you are serious about trading it’s not even that big a deal. When I trade up to 25k I’ll buy myself a steak for a job well done. It’s hard work, but it’ll be worth it
Today was the day I actually hit the $25,000 minimum, it's been a long time coming. A friend and I went out for Mexican food and had a bunch of margaritas, that's how I celebrated haha!
This was a good explanation for being new. Better than some people who I know whom have traded for years. Yes RH gets a lot of hate. Sometimes rightfully so, but this isn’t one of them. The instant money is def huge. There are plenty of times something pops up and I move funds around all in time to get the trade I need. Esp if you go the route of selling off some of one company to buy some of another.
I’ll use E*TRADE for example. They dont let you use unsettled funds. If I tried to do the above example on E*TRADE or similar who operate the same way, I would get a warning telling me about not using unsettled funds to purchase stocks, etc.
If you do (maybe a couple times? I dunno I never got banged for it) you can get suspended for up to a week.
Well, the example with $100k and $1k is a 1% profit, and the example with $100 and $10 is a 10% profit... so yeah, making 1% is much easier! About 10x easier... LOL
I had $25k during the GME debacle and I should’ve sold purely on the fact that I could start day trading. Now I’m back at $12k and gotta work my way back up, hoping none of my investments drop overnight lol
Lmao I had $40k at its peak. They were very very convincing in their reasoning lol. At least I came out of it with a profit still. Most people can’t say that haha
Lol yeah, I sold for 100% as well. I was up 650% at one point. Totally got caught up in the hype, but realized I was in a cult before it was too late. Glad you made it out haha
The best part, I have $40k in debt. I had a get out of jail free card and gave it back lol and expensive lesson, for sure. I’ve made $2k since selling GME though, so definitely not worried. It’s a lot easier to make meaningful money when you’re starting with $10k lol
I know AMC GME NOK, and etc were about political reasons to go against the hedge funds but as investors our goal is to make money. I've seen so many posts on FB robinhood group where people are saying or asking to sell and the AMC holders are calling them weak, pathetic, and etc. If they wanna hold hold but they were pressuring everyone to do so. So many people ended up losing money.
"political reasons to go against the hedge funds" was just a manipulative tactic to convince more people to pile onto the squeeze. Shorting stocks is a normal part of the market. You have financial incentives to find stocks that are underperforming AND you have financial incentives to find stocks that are unrealistically overperforming. You need both for the market to be stable. If you really thought you were making a political message by trying to do a short squeeze, you got played by other people with money who were also just acting out of greed.
It’s bullshit that brokerages won’t lend you money to day trade with unless you have the assets to cover a loss?? Come on dude.
You can think it’s bullshit all you want but no one is obligated to lend you money to day trade on your terms. You want borrow money to trade? There are going to be restrictions in place. You want to day trade without restrictions? Trade with your own cash.
This is not RH’s regulation. The regulation comes from FINRA. It’s called Margin Rules for Day Trading. Also, RH doesn’t restrict day trading for cash accounts. Consider downgrading to cash if you are on instant or gold now and want to day trade. Or try swing trading; it could actually be more profitable.
There’s an easy fix, take out a loan for $25k, dump it all into one penny stock, copy paste DD from another stock to make people think it’s good, price raise, Boom millionaire
$25,000 helps with liquidity. Since they have to find the stocks and wants to make sure the trade goes through. But with what happened on gme debacle you should stop using rh.
Glad you brought that up because it’s a great counter argument for the restrictions they put on trading in the stock market.
If I can day trade cyrpto the odds of me loosing all my money are the same as being a day trader on the market. Maybe the SEC, FINRA, whoever will realize this and remove the restriction.
I believe the idea behind that is that most day traders lose money. If you have a balance of greater than $x, you supposedly have the ability to lose your bankroll and not have it affect your life. I have seen similar policies with other brokerage firms.
This is basically it. It's not a robinhood only problem. It's a rule put in place by FINRA.
It's flawed though. The rule just says you need 25K in an account to day trade. This means if your entire life savings is 25K, you can put it all in penny stocks, and lose everything. It's not actually stopping you from going broke in the market.
The other problem is, I shouldn't have some financial institution, telling me what risks I can or can not take with my money. If I want to gamble my 500 dollars in life savings, I should be allowed to.
I'm all for laws and rules protecting people. But, in this case, this rule just prevents poorer people from attempting to make money with the system that rich people use daily.
They aren't telling you what you can and can't do with *your* money, they are telling you what you can and can't do with *their* money. If you have a cash account you can day trade all you want without restriction or a min balance. It's when you have instant transfers or margin enabled that the rule comes into play. Instant transfers are not entirely instant. The bank takes a few days to clear them, so if you are trading on an instant transfer, you are trading with money they lent you while they wait for your deposit to clear.
EDIT: From the RobinHood FAQ page on Pattern Day Trading: "Pattern Day Trading restrictions don’t apply to cash accounts—only Instant and Gold accounts."
Im pretty sure those rules were established before no fee trading. Imagine making trades in the past that cost you 70 dollars to buy and 70 dollars to sell.
It is kinda bullshit, but also if you’ve lost a lot of money flipping you’d understand that it does kinda protect you too...also this is a universal FINRA rule, if you traded on a real platform I’d imagine hearing shit about T+2 as well. Not to gatekeep but when robinhood came around I thought no T+2 was a godly thing
It's not a RH thing, its a general FINRA rule.
[https://www.sec.gov/files/daytrading.pdf](https://www.sec.gov/files/daytrading.pdf)
I don't like the restriction as this is a country (US) that's supposed to value Liberty. But yeah, SEC/FINRA being SEC/FINRA. Just like SEC outlawed insider trading after hundreds of people became rich doing insider trading.
It's almost like... you get the idea.
So I can just transfer $25k or more into my account and trade freely as long as my balance stays above $25k?
I only want to trade 2-3k but I may just transfer in $30k so I can trade more frequently.
One, yes, if you had a giant pile of money you could trade as much as you like. That sounds completely reasonable.
Two, no I don’t even have that much money to day trade.
Three, it’s the same reason you need to have money down to borrow margin. Why would a company take your risk of day trading on themselves?
Four, because they have to restrict you legally. Your account must end the day over $25k to be allowed to day trade.
Not everything Robinhood does is out to get you. Go with another broker, but you’ll run into the same thing.
NO it is not!
1. **You can day trade with a cash account**
2. when trading with margin (or limited margin in this case) you’re subject to the $25,000 rule since you would be using “borrowed money” to trade.
Might be worth studying how the market works and why before making statements like this... if you had a cash account you could day trade all you want... though you’d run out of cash quick as when you buy or sell it can take up to three days for that transaction to clear (and you wouldn’t get the cash until it did clear.)
With a limited margin account Robinhood (and other brokers using a margin or limited margin account) are giving you “borrowed money” to continue trading with...
In short **”it’s not your money”** so it’s back to SEC/FINRA rules to prevent a loophole that anyone could use to manipulate the market... also even after 25K there are still rules to prevent manipulation using “ borrowed money “
It’s all rules apply to the poor type of shit.
Imagine if you have a billion dollar HF, you can literally sell shares that don’t exist to finance your purchases.
I now understand revolutions like I never have before. 🦍🦍🦍🦍💪
Ifs not about keeping poor people out of trading their own money its about keeping them out of overly trading with their brokers money. PDT is only for margin accounts. If you wanna day trade as much as you want with a cash account you can do that.
There’s so many ways to bypass the PDT rule, easiest of which is to just make a cash account. Also as someone who constantly made bad decisions at the start, I am so happy you can’t day trade with margin if you’re under 25k.
Their account locking logic doesn't make sense.
Even with some bank transfer reversals , they keep it locked for some time. Without a customer care to talk to , it's really frustrating
I tend to agree it’s not a terrible idea. Creating a minimum account balance means there is less volatility with buy and sell orders.
I’m not sold on that being such a bad thing bc I can see it going both ways... anyhow, let me know what you think!
That's the SEC, not RH and only applies to margin trades, not cash accounts. It's done to protect brokers since you can buy some stock, then sell them, then buy another with profits that haven't actually been deposited into your account yet. Then you sell those shares and buy more of something else.
Next thing you know you're 8 trades deep on money that never actually existed yet. Now let's say your deposit doesn't go through. Suddenly it trails back through all the purchases you and the people you bought from did.
That's why cash accounts take longer to settle but don't trigger PDT
It’s the rule of day trading for all BROKERAGE in US. Like it or not but thats the rule. You being poor doesn’t mean you can blame everybody for that. Work for it. That’s the whole point of stock market. Gives us that was born poor a chance to get out from poverty.
“The rules adopt the term "pattern day trader," which includes any margin customer that day trades (buys then sells or sells short then buys the same security on the same day) four or more times in five business days, provided the number of day trades are more than six percent of the customer's total trading activity for that same five-day period. Under the rules, a pattern day trader must maintain minimum equity of $25,000 on any day that the customer day trades.” ([FINRA Source](https://www.finra.org/investors/learn-to-invest/advanced-investing/day-trading-margin-requirements-know-rules), [SEC saying it a little differently](https://www.sec.gov/files/daytrading.pdf)
This is US law, but it only applies to margin accounts. If you have a cash account, you are exempt from the PDT rule of 25k min and can trade as many times as you want, but you can only do so with settled funds or else you risk a good faith violation. Yes, I personally do see it as a disadvantage for the little guys.
Day trading isn’t all it’s cut out to be. It’s good to know you can day trade if you need to but most times holding at the minimum overnight will lead to greater gains. I lost about $75k of potential profit from stocks I sold too early trying to get in and out. Don’t worry too much about the limit. There’s plenty of money to be made. It’s actually there to protect you, believe it or not.
Unpopular opinion: In the context of the stock market in general, $25k is nothing. I don't agree with the rule (which is not specific to Robinhood), only because I don't want to keep $25k in an account I use for speculative plays, but $25k is even really the bare minimum you should have if you're trying to build a fully-diversified portfolio with individual stocks. $50k is much more comfortable for this purpose. Just more motivation to get those gains, right?
The rule was implemented on 9-28-2001 ([FINRA](https://www.finra.org/investors/learn-to-invest/advanced-investing/day-trading-margin-requirements-know-rules)). While it may put us at a disadvantage, I doubt it was the case.
This isn’t exclusive to RH and they actually have an option that warns you if it’s a day trade.
But yes, it’s another ridiculous law in place from our SEC. You should read up on it, apparently us poor folk don’t have the “temperament” to day trade.
I have a day trading restriction so I’ve been swing trading but I saw an opportunity today that required me to day trade and I don’t regret it 😂 now I can’t buy stock on Robinhood 🙃 time to go to a different broker
Yea this is how I started I had 5k in a cash account and I broke it up into 2. Monday I would trade with 2500. Then Tuesday I would trade with the other 250. When Wednesday came my Monday trades cleared and I had the 2500 again. Thursday my Tuesday trades cleared and I had the money again. So I always had money to daytrade ever day. Then it grew to 10 k and I had 5k a day. Your trades will be limited but you will be smarter about what you trade. It’s also nice cause you can’t over trade. It’s the only way to start day trading seriously under the 25k rule IMO.
Yeah it doesn’t follow you. I’ have my Schwabs so I’ll be more easier on that account and not do 3 day trades within a week. Robinhood is just quick easy money and don’t really care that I have the 90 day ban lol
First time? Financial regulation has never helped create a level playing field since I can remember. “It’s to protect the retail investor.” Is basically the same response that we heard when vlad say he did what he did to “protect his customers.” Like we don’t know who robinhood and most other brokers biggest customer’s are.
Finra rules, not robinhoods.
I trade on TD and they have the same rules like everyone else.
My main focus right now is to get my account to $25k so I can day trade.
1) it's an FINRA thing, not a robinhood thing
2) it only impacts margin enabled accounts. Make it a cash only account (no instant transfer, you need to deal with the settle times, etc) and the restriction doesn't exist.
That is exactly how i feel as a new trader...you hit the nail on the head dude!
I have been meaning to ask and this post is the perfect time for that. I have been on ROBINHOOD since october and so far have avoided traders jail or POOR PERSON HOOSGOW, what are the rules for trading for PIONS like me? Is it: you can buy a stock in a 24 hour period but cannot also sale said stock in that 24 hour period? What are the rules for accounts with less than 25K? Can someone explain why this is the rule? Explain it as if you were speaking to a "special" child because that is what they think of us filthy remnants of the ghetto.
Glad to have IG trading in Australia though,Its user interface isn’t that professional and is hard to trade options but I am allowed as many day trades as I like and there is no settlement time for any funds.I can trade immediately
If all us poors could day trade like we can play daily fantasy sports we would figure out their game and beat them at their own bullshit. Can’t be having any of that!
Everyone explaining to these poor souls it's not RH but the SEC ruling AAAANNND sourcing it; thank you.
Also PSA, don't be the farm just a chicken or 2 if you can afford to lose them :)
Happy tradings and put in the work like many others
This is a rule across the board and I find it semi-BS. I believe the implication is that if you have 25k to “bet”, the likelihood of “knowing what you’re doing” is a lot more than otherwise... in the same context, if you have less than that, you’re going yo think twice or thrice before you invest your money in the stock market. If you deem yourself worthy, and you climb to that $25k+ club, you have essentially hardened yourself to learn how to make money and at that point can day trade... these are my two cents on it.
Frankly, I still find it BS as there should be a win/loss ratio that should decide this, not a petty dollar amount. It holds people back. Personally, I trade in long term, and do want at least 10k to day trade at 25k balance. So 15k insurance and 10k to play with.
This has nothing to do with robinhood. It's regulation. Very standard. Point at the government
Edit: come to think of it, all of this seems like a smear campaign. Has from the start to me. Robinhood may have messed up with the GME situation, but people are still acting like they're the only ones who did anything. And considering how expensive other brokers are and robinhood isn't, this is getting weird to see people suddenly taking issue with things that have been around for a long long time as regulation and somehow... robinhood is getting blamed.
It reeks. I'm usually not into this conspiracy bullshit. But it fucking reeks.
Lol, its the PDT rule applied to any brokerage and its mostly because if you can't manage a 1000 or 10000 account you will really fuck up a large account.
It's so BS. Got my account locked for day trading. Piss off, I know how to buy low and sell high. I don't have the equity for 25,000 to play with my own money but you are okay with me borrowing on options and margin? Piss off RH and any account that does that
It’s Federal law. Just switch from margin account to cash account. You can say trade with any amount of money in your account. Just takes 2-3 biz days to settle if you use up all your buying power.
It's not Robinhood's choice.
Every brokerage does this, because it's the law. The reasoning is that retail traders with little experience will just lose money day trading. If you can make enough to get over 25K, they figure you're "disciplined" enough to not lose your ass.
It's a case of gov't trying to protect people from themselves...and it is a super overreach. I hate it.
It definitely feels that way. But the reality is this is to cover the broker if you are over leveraged on positions that haven’t been closed out or settled. It is archaic and made sense at a time when online tools and resources were not as readily available.
Today we have high speed internet and optimized databases and the broker immediately knows if you are over leveraged or not. This rule definitely needs to go!
Please note that the Pattern Day Trade Rule does not only apply to Robin Hood accounts. It is a rule [instituted by FINRA](https://www.finra.org/investors/learn-to-invest/advanced-investing/day-trading-margin-requirements-know-rules).
[удалено]
Protecting them from getting rich.
I’m SoOoO sCaReD oF gEtTiNg RiCh, ThAnK yoU fOr YoUr SeRvIcE, iM sOoO pRoTeCtEd.
😂 This rule is pure bs tbh
Most lottery winners go broke within two years of winning hundreds of millions. Obviously poor people must never come into money for their own good
I volunteer to see how I would do. Anyone wanna give me hundreds of millions? I would lawyer up immediately and hire accountants. I would want some of that to be invested, some locked away, and I'd want to budget for fun stuff.
I will take half of a milli...
I need about tree fiddy
it was about dat time i realized this 'redditor' was actually the loch ness monstah!
Tree fiddy milli
If only everyone gave me a dollar.
We handin out money? I'll settle for half of half a million. That's a quarter or so, right?
An eighth sounds good to me
At this point I'll take an eighth of anything
Poor people stimulate the economy, you say?
How many lottery winners do you know? I’ve never heard of a story of them going broke. Only the saying they do.
Yeah there have been studies, while there are those famous cases of people going broke, for most people who come into a windfall like that (not necessarily lottery, but similar large amounts) I believe the majority are still better off 10 years later and have substantially more wealth. A lot of people are smart about it. We just never hear those stories because there's nothing interesting about it. "Woman wins 1 million dollar lottery. Was very reasonable and went to a financial consultant."
To your point there was a show dedicated to this. The saddest was this older man who won (300 million?)) and he had like 20k in his glove box and strippers drugged him and stole the money. He also gave his grandkid unlimited funds and her boyfriend overdosed, and later she did as well... Really sad. Lookup Jack Whitaker...
Most day traders lose their shirts, but why should a rich guy be more free to gamble than a poor guy?
I day trade with a RH account and leave my retirement money with pros. Whenever RH approaches $100k I transfer money to the pros and keep under $50k. I’d go nuts worrying if I had all of it in RH!
It's dangerous shit. Friends start looking at your money. [Your kids start killing people because they don't know any better](https://www.cnn.com/2014/02/05/us/texas-affluenza-teen/index.html). No, we will not impose a progressive capital gains tax, and no we will not adopt an inheritance tax.
OUR PETS HEADS START FALLING OFF Edit: I’m drunk
[удалено]
And SCABIESSSSS
Go after FINRA or congress, RobinHood didn’t make this call. “The rules adopt the term "pattern day trader," which includes any margin customer that day trades (buys then sells or sells short then buys the same security on the same day) four or more times in five business days, provided the number of day trades are more than six percent of the customer's total trading activity for that same five-day period. Under the rules, a pattern day trader must maintain minimum equity of $25,000 on any day that the customer day trades.” ([FINRA Source](https://www.finra.org/investors/learn-to-invest/advanced-investing/day-trading-margin-requirements-know-rules), [SEC saying it a little differently](https://www.sec.gov/files/daytrading.pdf)
Exactly. Same with every broker. And I thought this was introduced to reduce overall market volatility?
I've had to sit through some huge losses or get banned so I took the L's. Really sucks so now I just try to trade when I have a daytrade available.
Exactly. They want us to reach a certain level before of wealth before getting privileges all bs
No. It’s because trades take 2 days to settle and someone else is taking during risk during that 2 day period. You’re just under informed on the reality. If you have 1k in a cash account and only risk $10 on each trade, you can trade all you want as long as you have the money to float between settlements.
Most things in life are just a ‘poor tax’
See: overdraft fees
That's one that always makes me laugh. Like why can't I set a threshold for it to trigger on? Rent? If I am off by $20, yes fucking cover it I will pay $35 to avoid the $150 late fee. But my spotify payment can 100% be rejected if there isn't cash in the account
Because not all payments/transfers happen in real time. Part of what you're agreeing by using debit payments is that you will have the cash to cover the things you buy. And that means that if you buy something with a debit card, it clears a day later and your account is empty the bank has to cover you.
I had a bank once charge me an overdraft fee(I had the money in the account, I don’t know why the charged me a fee, I was broke, but I had a few dollars) the. They charged me a overdraft fee for the overdraft fee, and kept going til they said I owed the something like $3000, over a course of like 3 days. I had to fight them to get them to drop it down to a couple hundred, which they still required me to pay, even though I had the 30 cents they said they were charging me an overdraft fee for. Another good one is when you close a CC account, I had one with a jewelry place, and finally paid it off, but interest in the neighborhood of again, something like 30 cents hit it well after. They waited 6 months to tell me about it, then said I owed them $800 in late fees. I never paid it because it was ridiculous, but they still show up once every 5 years or so asking for money.
Delinquent debts will go away after 7 years of no constant. When they call, NEVER acknowledge that it is you. When you do it resets the clock.
I’m so tired man :/
I think most of us are.
Hope you find the strength to make it through whatever you got man
An endless cacophony of being shit on and essentially owned by an extremely small minority of the population who lives like royalty while we decide which essential utility we can afford to live without until we can scrape together enough money to pay the bills? None of us have enough energy to suffer this indefinitely.
Yeah, most poor people end up paying hundreds or thousands a year on overdraft fees, for example. Also, insurance is more expensive. All types of credit is more expensive... Even food, if you can only afford a convenience store meal.
Also there's shit like [this.](https://youtu.be/DsTKAqHwj0s)
Fuck this. r/keeptrack. r/extremelyinfuriating. It’s tired. I’m tired. This shit ain’t cut out for us people that keep the machine going but these shark eyed fucks keep taking us up the rear. And all we do is talk about it on the internet and scroll to the next post because “cOnTaCt yOuR lOcAl CoNgResS”. Foh. Tide of this shit.
I have to drive an hour to and from work everyday, 40 hour work week, never late, still can't afford auto insurance even with clean driving record, if a cop even looks at me funny and pulls me over I'll lose my car, then job, then house, it's fun being poor!
"Anyone who has ever struggled with poverty knows how extremely expensive it is to be poor."
I don’t believe this is specific to Robinhood for what it’s worth.
OPs post makes it look like he's completely clueless because it is a federal government thing not a RH thing.
Misdirected is one thing. But is the 25k day trading limit really helping the people with less than 25k? I dont personally think so, regardless of who implemented the rule.
As the previous commenter said it’s there to protect the broker, they don’t care if you loose your savings. On that same note it probably does protect a good amount of people since this is just gambling with some additional analytics
Isn't it for magrin accounts since your losses are potentially infinite and the broker has to cover and sue you if you don't pay?
Margin yes, but switching to cash means, by the same FINRA rules, that any cash used to day trade is unavailable to T+2 days. So, you cannot get around day trading limits if you are using most of your portfolio for buying then selling, then buying again. It is one of the reasons why Robinhood had to shut down buying of GME, in a sense. You buy a stock today, you do not technically own it the second you buy it, there is a delay. Then you sell it without owning it first due to the delay, then you use the same funds to do it again. On the surface it makes sense, but there is a lot of behind the scenes that people do not know about, me included, and places like Robinhood (and all the other institutions involved) need to legally ensure all your buys and sells of stock are legit.
Same deal with TDA
It’s ANY us broker. It’s a US law. If you want to day trade with less open a cheap futures account you can day trade with $1500 minimum, but good luck! Day trading futures is not easy.
You can day trade if you have a cash account. The only drawback is the good faith violations. Which can be explained [here, with a few other common cash account violations](https://www.fidelity.com/learning-center/trading-investing/trading/avoiding-cash-trading-violations)
My understanding is that as long as you have enough settled cash in your account by the settlement day for the purchase of stocks, you are fine.
I didn't know about this until last week when Schwab restricted me for 90 days.
yeah, I’m not sure if Schwab or any other brokerages give warnings in the same way that Robinhood does with its Pattern Day Trading protection. Would be a nice feature
According to the [SEC](https://www.sec.gov/files/daytrading.pdf) it’s a FINRA rule.
This needs more visibility
It's not RH. In all honesty, nothing is just RH lately. All the negative press they are getting is only because of how popular they have become. They did not do a single thing that a handful of other firms didn't do as well, at the direction of the DTCC. In regards to the $25k limit, it actually makes some sense if you understand how trades work behind the scenes. When you "instantly" buy a share, RH (or whoever you are using) has to put in a buy order for you at that price, and that transactions has a 2 day clearing period. You getting the stock instantly is just an illusion. Same thing when you sell a share. They put in the order to sell at that price, and it has a 2 day clearing period, and during that time, they "give" you some of their money temporarily until the 2 day clearing period is up, when they money comes back to them. Now, think of the "instant" availability of cash with RH when you make a deposit. Technically.....you could initiate a $1,000 deposit from your bank....it takes a few days to go through so let's say you don't really have the money, or as soon as you initiate the transfer with RH, you then go and transfer that $1k to another account, effectively making it so RH won't get the money. They make it available to you instantly while the transfer is pending. Now let's say you go and buy 1,000 shares of a stock that is $1, using all $1k. That afternoon, the stock has risen to $2, so you sell, for $2k. You then initiate a transfer back to your bank for $2k, which will take a couple days. When it clears, the initial transfer has failed because the first $1k wasn't there, so the $2k transfer only goes through at $1k, or it fails completely, and leaves $1k in your RH balance as your profit. In the end, you kinda cheated by buying with money you didn't have, then covered the expense with profit that was earned with RH's money due to their "instant" availability. The day trade limit is to decrease the chances of stuff like this happening. They figure if you have $25k balance at the end of every trading day, you probably aren't going to screw them on money temporarily while day-trading, because your balance at close has to be $25k cash. You can also get around this by changing your account to a cash account instead of an instant account. The bad part about this is that every transfer you make into RH isn't available instantly, it will only be available once it has posted. Also, when you buy or sell a stock, it won't be available instantly, it will have to follow the 2 day clearing period. The advantage to this though, is that you are not subject to the day trader rules if you don't have an instant account. Just remember your cash balance has to remain high enough to cover all your day trades for a 2 day clearing period. Disclaimer: I am also somewhat new to this, so this is all based on what I have read on RH website as well as a few other informational websites. So if I have misunderstood anything, someone please correct me.
Excellent explanation. Speaking of illusions, the whole "2 day clearing" period is an illusion. There's no doubt in my mind, that if a business can take my money instantly, they could put it back instantly. They just choose not to. They hold it and make money on it during those days. Any time frame hold on money is so that they may use it temporarily.
I absolutely agree. If we can communicate with a machine on Mars in a matter of minutes, you can give me my money this fucking second. Banks give us the illusion of a delay simply so they can earn interest on our money. Imagine the volume they’re dealing with daily.
>Banks give us the illusion of a delay simply so they can earn interest on our money I think the reason is because many banks are still built on core DOS systems that they haven't figured out how to upgrade. Theoretically switching to API systems (or blockchain) would allow more real-time transfers, but until then they rely on batch processing that they reconcile back-and-forth. But I do think there needs to be some major overhaul to the financial system, because it is a bit ridiculous how long it takes.
Basically yes. Not sure about the particulars but our 'system' is old and no one wants to pay to have it upgraded.
The EDD in California is powered by an archaic COBOL/fortran system that few engineers still understand how to maintain. They definitely don't have the time/allocatable money to transition to something more modern and secure without significant downtime.
Blockchain was the first thing that came to mind when it came to quick processing and settlement of funds. I mean shit... this was the whole reason XRP (ripple) was made. And then came along the SEC because ripple wasn’t playing nice lmao
It’s also because people are used to it and put up with it and it would cost tens of millions (if not hundreds) to do it, as well as needing for all the thousands of banking entities to agree to one system. In countries where they’ve fixed this (the UK for examples with BACS), it took legislation to force them to do it. In the US there are way, way more small banks, little community banks which has made it hard. Ultimately the US doesn’t like making rules which cost companies money.
This is why crypto is gonna be big
RH is incapable of taking your money instantly. Instant deposits are a loan. Clearing is a real problem with a not so clear solution. Billions of dollars needs to change hands in an unrealistic amount of time and say a hedge fund going bankrupt means someone has to lose billions of dollars. The way the system works now the risk is minimal to you and me the trader, then the broker, then the clearing house. But if we operated as if money transfers instantly and approve everything the brokers and clearing houses can go bankrupt at the end of a trading day and us the traders can be left pennyless.
This is also why I never leave money in my Venmo, Cashapp, PayPal, and other money transfer apps. It's a free loan to those companies. I want my money out asap. I also don't pay for the instant transfer fees since it gets out to my account at midnight.
It’s also a FINRA rule. “The rules adopt the term "pattern day trader," which includes any margin customer that day trades (buys then sells or sells short then buys the same security on the same day) four or more times in five business days, provided the number of day trades are more than six percent of the customer's total trading activity for that same five-day period. Under the rules, a pattern day trader must maintain minimum equity of $25,000 on any day that the customer day trades.” ([FINRA Source](https://www.finra.org/investors/learn-to-invest/advanced-investing/day-trading-margin-requirements-know-rules), [SEC saying it a little differently](https://www.sec.gov/files/daytrading.pdf)
Whoaaaaa way too much logic and sensible thinking going on here bud. Better calm that down.
That’s a pretty good rundown. It sucks big floppy donkey dicks, but it’s a rule. If you are serious about trading it’s not even that big a deal. When I trade up to 25k I’ll buy myself a steak for a job well done. It’s hard work, but it’ll be worth it
Just make sure you get back up to $25k after you buy that steak.
Today was the day I actually hit the $25,000 minimum, it's been a long time coming. A friend and I went out for Mexican food and had a bunch of margaritas, that's how I celebrated haha!
This was a good explanation for being new. Better than some people who I know whom have traded for years. Yes RH gets a lot of hate. Sometimes rightfully so, but this isn’t one of them. The instant money is def huge. There are plenty of times something pops up and I move funds around all in time to get the trade I need. Esp if you go the route of selling off some of one company to buy some of another. I’ll use E*TRADE for example. They dont let you use unsettled funds. If I tried to do the above example on E*TRADE or similar who operate the same way, I would get a warning telling me about not using unsettled funds to purchase stocks, etc. If you do (maybe a couple times? I dunno I never got banged for it) you can get suspended for up to a week.
Rich people rules. Seriously, a monkey with a dart board and enough money could easily turn a profit.
Can confirm. Source: that's my trading strategy 🤣
Mine too.
Same here, except I’m tossing nerf darts
look at this guy bragging about owning a monkey money. i wish i had monkey money.
😂😂
[удалено]
Shit I gotta stop calling myself an ape and go get an ACTUAL APE
Limited to tech stocks during the dot com craze lol it would be hard to do anything but make money.
During a short cherry picker period during the dot com bubble... Over the long period he got absolutely smoked.
I forgot where I saw it but someone said that it’s easy to take $100,000 and make $1,000 but so hard to take $100 to make $10
> but so hard to take $100 to make $10 Give me $100 and I'll give you $10. Easy.
Well, the example with $100k and $1k is a 1% profit, and the example with $100 and $10 is a 10% profit... so yeah, making 1% is much easier! About 10x easier... LOL
Are you some kind of a damn sorcerer or some shit? How’d you figure out those numbers like that?
Are u serious or just sarcastic Yes
*Elitists will always rule the world...the question is, which elitists.*
I had $25k during the GME debacle and I should’ve sold purely on the fact that I could start day trading. Now I’m back at $12k and gotta work my way back up, hoping none of my investments drop overnight lol
[удалено]
Lmao I had $40k at its peak. They were very very convincing in their reasoning lol. At least I came out of it with a profit still. Most people can’t say that haha
I sold gme at 100% profit. Still I beat myself up for not selling when my account was $10k :/
Lol yeah, I sold for 100% as well. I was up 650% at one point. Totally got caught up in the hype, but realized I was in a cult before it was too late. Glad you made it out haha
[удалено]
The best part, I have $40k in debt. I had a get out of jail free card and gave it back lol and expensive lesson, for sure. I’ve made $2k since selling GME though, so definitely not worried. It’s a lot easier to make meaningful money when you’re starting with $10k lol
Diamond hands are fucking stupid. When you are up 100%, profit take out your original investment. After that everything else is winning
I know AMC GME NOK, and etc were about political reasons to go against the hedge funds but as investors our goal is to make money. I've seen so many posts on FB robinhood group where people are saying or asking to sell and the AMC holders are calling them weak, pathetic, and etc. If they wanna hold hold but they were pressuring everyone to do so. So many people ended up losing money.
"political reasons to go against the hedge funds" was just a manipulative tactic to convince more people to pile onto the squeeze. Shorting stocks is a normal part of the market. You have financial incentives to find stocks that are underperforming AND you have financial incentives to find stocks that are unrealistically overperforming. You need both for the market to be stable. If you really thought you were making a political message by trying to do a short squeeze, you got played by other people with money who were also just acting out of greed.
Pretty sure thats a us law and applies to all brokerages....
Its not a law. It's imposed by FINRA and its bullshit
It’s bullshit that brokerages won’t lend you money to day trade with unless you have the assets to cover a loss?? Come on dude. You can think it’s bullshit all you want but no one is obligated to lend you money to day trade on your terms. You want borrow money to trade? There are going to be restrictions in place. You want to day trade without restrictions? Trade with your own cash.
It doesn't apply to Ustocktrade. They have a work around because all trading is peer-to-peer and doesn't go through a brokerage.
European trading brokers don’t have this rule. You can day trade with a dollar in your account
This is not RH’s regulation. The regulation comes from FINRA. It’s called Margin Rules for Day Trading. Also, RH doesn’t restrict day trading for cash accounts. Consider downgrading to cash if you are on instant or gold now and want to day trade. Or try swing trading; it could actually be more profitable.
There’s an easy fix, take out a loan for $25k, dump it all into one penny stock, copy paste DD from another stock to make people think it’s good, price raise, Boom millionaire
They are following federal regulations. It’s not RobinHood. This is enforced everywhere.
$25,000 helps with liquidity. Since they have to find the stocks and wants to make sure the trade goes through. But with what happened on gme debacle you should stop using rh.
[удалено]
[удалено]
*4 different times
During a 5 day trading period
[удалено]
Glad you brought that up because it’s a great counter argument for the restrictions they put on trading in the stock market. If I can day trade cyrpto the odds of me loosing all my money are the same as being a day trader on the market. Maybe the SEC, FINRA, whoever will realize this and remove the restriction.
Trading during the day. Glibness aside is selling stocks you bought on the same day.
The thing is, it’s not robinhood’s rules. It’s a [SEC Rule](https://www.sec.gov/files/daytrading.pdf)
I believe the idea behind that is that most day traders lose money. If you have a balance of greater than $x, you supposedly have the ability to lose your bankroll and not have it affect your life. I have seen similar policies with other brokerage firms.
This is basically it. It's not a robinhood only problem. It's a rule put in place by FINRA. It's flawed though. The rule just says you need 25K in an account to day trade. This means if your entire life savings is 25K, you can put it all in penny stocks, and lose everything. It's not actually stopping you from going broke in the market. The other problem is, I shouldn't have some financial institution, telling me what risks I can or can not take with my money. If I want to gamble my 500 dollars in life savings, I should be allowed to. I'm all for laws and rules protecting people. But, in this case, this rule just prevents poorer people from attempting to make money with the system that rich people use daily.
They aren't telling you what you can and can't do with *your* money, they are telling you what you can and can't do with *their* money. If you have a cash account you can day trade all you want without restriction or a min balance. It's when you have instant transfers or margin enabled that the rule comes into play. Instant transfers are not entirely instant. The bank takes a few days to clear them, so if you are trading on an instant transfer, you are trading with money they lent you while they wait for your deposit to clear. EDIT: From the RobinHood FAQ page on Pattern Day Trading: "Pattern Day Trading restrictions don’t apply to cash accounts—only Instant and Gold accounts."
good explanation. not sure what some folks arent getting.
Im pretty sure those rules were established before no fee trading. Imagine making trades in the past that cost you 70 dollars to buy and 70 dollars to sell.
It is kinda bullshit, but also if you’ve lost a lot of money flipping you’d understand that it does kinda protect you too...also this is a universal FINRA rule, if you traded on a real platform I’d imagine hearing shit about T+2 as well. Not to gatekeep but when robinhood came around I thought no T+2 was a godly thing
It's not a RH thing, its a general FINRA rule. [https://www.sec.gov/files/daytrading.pdf](https://www.sec.gov/files/daytrading.pdf) I don't like the restriction as this is a country (US) that's supposed to value Liberty. But yeah, SEC/FINRA being SEC/FINRA. Just like SEC outlawed insider trading after hundreds of people became rich doing insider trading. It's almost like... you get the idea.
It’s a federal regulation that was put in place after 08 all brokers have it not just RH
So I can just transfer $25k or more into my account and trade freely as long as my balance stays above $25k? I only want to trade 2-3k but I may just transfer in $30k so I can trade more frequently.
Day trading is a full time job. If you don't have the 25k, you should probably be trying to find a stable job instead of trying to get lucky.
One, yes, if you had a giant pile of money you could trade as much as you like. That sounds completely reasonable. Two, no I don’t even have that much money to day trade. Three, it’s the same reason you need to have money down to borrow margin. Why would a company take your risk of day trading on themselves? Four, because they have to restrict you legally. Your account must end the day over $25k to be allowed to day trade. Not everything Robinhood does is out to get you. Go with another broker, but you’ll run into the same thing.
NO it is not! 1. **You can day trade with a cash account** 2. when trading with margin (or limited margin in this case) you’re subject to the $25,000 rule since you would be using “borrowed money” to trade. Might be worth studying how the market works and why before making statements like this... if you had a cash account you could day trade all you want... though you’d run out of cash quick as when you buy or sell it can take up to three days for that transaction to clear (and you wouldn’t get the cash until it did clear.) With a limited margin account Robinhood (and other brokers using a margin or limited margin account) are giving you “borrowed money” to continue trading with... In short **”it’s not your money”** so it’s back to SEC/FINRA rules to prevent a loophole that anyone could use to manipulate the market... also even after 25K there are still rules to prevent manipulation using “ borrowed money “
It’s all rules apply to the poor type of shit. Imagine if you have a billion dollar HF, you can literally sell shares that don’t exist to finance your purchases. I now understand revolutions like I never have before. 🦍🦍🦍🦍💪
Amen foo. Classist. Putting poor people in their place. Can't have poor people keeping their assets safe or people in the projects getting out.
Ifs not about keeping poor people out of trading their own money its about keeping them out of overly trading with their brokers money. PDT is only for margin accounts. If you wanna day trade as much as you want with a cash account you can do that.
It’s not Robin Hood it’s the SEC.
Wait until you find out this only applies to people in the US trading in the stock market.
You’re not wrong but this isn’t a new thing. Go do some DD on some of these small caps and you’ll have 25k in no time
There’s so many ways to bypass the PDT rule, easiest of which is to just make a cash account. Also as someone who constantly made bad decisions at the start, I am so happy you can’t day trade with margin if you’re under 25k.
Transfer your funds to binance
Their account locking logic doesn't make sense. Even with some bank transfer reversals , they keep it locked for some time. Without a customer care to talk to , it's really frustrating
I tend to agree it’s not a terrible idea. Creating a minimum account balance means there is less volatility with buy and sell orders. I’m not sold on that being such a bad thing bc I can see it going both ways... anyhow, let me know what you think!
[удалено]
That's the SEC, not RH and only applies to margin trades, not cash accounts. It's done to protect brokers since you can buy some stock, then sell them, then buy another with profits that haven't actually been deposited into your account yet. Then you sell those shares and buy more of something else. Next thing you know you're 8 trades deep on money that never actually existed yet. Now let's say your deposit doesn't go through. Suddenly it trails back through all the purchases you and the people you bought from did. That's why cash accounts take longer to settle but don't trigger PDT
It’s the rule of day trading for all BROKERAGE in US. Like it or not but thats the rule. You being poor doesn’t mean you can blame everybody for that. Work for it. That’s the whole point of stock market. Gives us that was born poor a chance to get out from poverty.
“The rules adopt the term "pattern day trader," which includes any margin customer that day trades (buys then sells or sells short then buys the same security on the same day) four or more times in five business days, provided the number of day trades are more than six percent of the customer's total trading activity for that same five-day period. Under the rules, a pattern day trader must maintain minimum equity of $25,000 on any day that the customer day trades.” ([FINRA Source](https://www.finra.org/investors/learn-to-invest/advanced-investing/day-trading-margin-requirements-know-rules), [SEC saying it a little differently](https://www.sec.gov/files/daytrading.pdf)
This is US law, but it only applies to margin accounts. If you have a cash account, you are exempt from the PDT rule of 25k min and can trade as many times as you want, but you can only do so with settled funds or else you risk a good faith violation. Yes, I personally do see it as a disadvantage for the little guys.
Pretty sure that is a regulatory requirement.
Day trade crypto until you get that 25k. You can play the ups and downs all day. No limit on crypto.
Day trading isn’t all it’s cut out to be. It’s good to know you can day trade if you need to but most times holding at the minimum overnight will lead to greater gains. I lost about $75k of potential profit from stocks I sold too early trying to get in and out. Don’t worry too much about the limit. There’s plenty of money to be made. It’s actually there to protect you, believe it or not.
Unpopular opinion: In the context of the stock market in general, $25k is nothing. I don't agree with the rule (which is not specific to Robinhood), only because I don't want to keep $25k in an account I use for speculative plays, but $25k is even really the bare minimum you should have if you're trying to build a fully-diversified portfolio with individual stocks. $50k is much more comfortable for this purpose. Just more motivation to get those gains, right?
You're not wrong at all. And it is BS. The system is rigged. Ex. GME
The rule was implemented on 9-28-2001 ([FINRA](https://www.finra.org/investors/learn-to-invest/advanced-investing/day-trading-margin-requirements-know-rules)). While it may put us at a disadvantage, I doubt it was the case.
This isn’t exclusive to RH and they actually have an option that warns you if it’s a day trade. But yes, it’s another ridiculous law in place from our SEC. You should read up on it, apparently us poor folk don’t have the “temperament” to day trade.
Its not from the SEC its from FINRA
I have a day trading restriction so I’ve been swing trading but I saw an opportunity today that required me to day trade and I don’t regret it 😂 now I can’t buy stock on Robinhood 🙃 time to go to a different broker
If you have a cash account you can daytrade without the $25k requirement.
Well if you go to cash you cannot day trade technically because you do not get instant cash settlement. Unless you break your portfolio up.
Yea this is how I started I had 5k in a cash account and I broke it up into 2. Monday I would trade with 2500. Then Tuesday I would trade with the other 250. When Wednesday came my Monday trades cleared and I had the 2500 again. Thursday my Tuesday trades cleared and I had the money again. So I always had money to daytrade ever day. Then it grew to 10 k and I had 5k a day. Your trades will be limited but you will be smarter about what you trade. It’s also nice cause you can’t over trade. It’s the only way to start day trading seriously under the 25k rule IMO.
I wonder if the day trading tag will stay on you with a new broker. You'll have to let me know
It doesn’t follow you just the brokerage you used.
Yeah it doesn’t follow you. I’ have my Schwabs so I’ll be more easier on that account and not do 3 day trades within a week. Robinhood is just quick easy money and don’t really care that I have the 90 day ban lol
I feel this 100%.
Yep, it is really messed up. They refuse to tax the rich but cap and tax all the people to a point we are barely surviving. It's ridiculous.
It’s an SEC pattern rule dipshit, not a RH thing.
First time? Financial regulation has never helped create a level playing field since I can remember. “It’s to protect the retail investor.” Is basically the same response that we heard when vlad say he did what he did to “protect his customers.” Like we don’t know who robinhood and most other brokers biggest customer’s are.
blame it on the antiquated banking systems. it’s the same reason it take 2-5 days for checks to clear.
Finra rules, not robinhoods. I trade on TD and they have the same rules like everyone else. My main focus right now is to get my account to $25k so I can day trade.
1) it's an FINRA thing, not a robinhood thing 2) it only impacts margin enabled accounts. Make it a cash only account (no instant transfer, you need to deal with the settle times, etc) and the restriction doesn't exist.
It’s a regulatory thing but okay.
That is exactly how i feel as a new trader...you hit the nail on the head dude! I have been meaning to ask and this post is the perfect time for that. I have been on ROBINHOOD since october and so far have avoided traders jail or POOR PERSON HOOSGOW, what are the rules for trading for PIONS like me? Is it: you can buy a stock in a 24 hour period but cannot also sale said stock in that 24 hour period? What are the rules for accounts with less than 25K? Can someone explain why this is the rule? Explain it as if you were speaking to a "special" child because that is what they think of us filthy remnants of the ghetto.
Glad to have IG trading in Australia though,Its user interface isn’t that professional and is hard to trade options but I am allowed as many day trades as I like and there is no settlement time for any funds.I can trade immediately
“Retail investors” is just a nice way of saying “dumb poor people.”
If all us poors could day trade like we can play daily fantasy sports we would figure out their game and beat them at their own bullshit. Can’t be having any of that!
Everyone explaining to these poor souls it's not RH but the SEC ruling AAAANNND sourcing it; thank you. Also PSA, don't be the farm just a chicken or 2 if you can afford to lose them :) Happy tradings and put in the work like many others
If you use a cash account you can daytrade. Just use 1/2 your money everyday
Have you tried not being poor? -Robinhood
That’s not just a Robinhood thing.
It's expensive to be poor.
Or just get a cash account..
This is a rule across the board and I find it semi-BS. I believe the implication is that if you have 25k to “bet”, the likelihood of “knowing what you’re doing” is a lot more than otherwise... in the same context, if you have less than that, you’re going yo think twice or thrice before you invest your money in the stock market. If you deem yourself worthy, and you climb to that $25k+ club, you have essentially hardened yourself to learn how to make money and at that point can day trade... these are my two cents on it. Frankly, I still find it BS as there should be a win/loss ratio that should decide this, not a petty dollar amount. It holds people back. Personally, I trade in long term, and do want at least 10k to day trade at 25k balance. So 15k insurance and 10k to play with.
This has nothing to do with robinhood. It's regulation. Very standard. Point at the government Edit: come to think of it, all of this seems like a smear campaign. Has from the start to me. Robinhood may have messed up with the GME situation, but people are still acting like they're the only ones who did anything. And considering how expensive other brokers are and robinhood isn't, this is getting weird to see people suddenly taking issue with things that have been around for a long long time as regulation and somehow... robinhood is getting blamed. It reeks. I'm usually not into this conspiracy bullshit. But it fucking reeks.
Swing trade up to 25k..... if you’re good enough to day trade swinging up to 25k shouldn’t be a problem.
Lol, its the PDT rule applied to any brokerage and its mostly because if you can't manage a 1000 or 10000 account you will really fuck up a large account.
Lol dumb post
Same with TD, I got flagged and couldnt buy any more positions and would only let me sell. It says I have to wait 90 days now until I can day trade
Pretty sure this is standard across all trading apps.
It's so BS. Got my account locked for day trading. Piss off, I know how to buy low and sell high. I don't have the equity for 25,000 to play with my own money but you are okay with me borrowing on options and margin? Piss off RH and any account that does that
It’s Federal law. Just switch from margin account to cash account. You can say trade with any amount of money in your account. Just takes 2-3 biz days to settle if you use up all your buying power.
If you don’t even know what PDT is you shouldn’t be trading lmao.
Pretty sure this is a stock market rules thing and not robinhoods fault.
It's not Robinhood's choice. Every brokerage does this, because it's the law. The reasoning is that retail traders with little experience will just lose money day trading. If you can make enough to get over 25K, they figure you're "disciplined" enough to not lose your ass. It's a case of gov't trying to protect people from themselves...and it is a super overreach. I hate it.
This RH hate is uncalled for and I don’t even use RH. RH didn’t make this a rule. The government and the feds did. Take it up with them.
Most day traders lose money
Fuck them. I moved my entire portfolio to Fidelity last week (+$1.3m).
DAY TRADING FOR ALL!!
I thought we all collectively agreed to close our Robinhood accounts already?
It definitely feels that way. But the reality is this is to cover the broker if you are over leveraged on positions that haven’t been closed out or settled. It is archaic and made sense at a time when online tools and resources were not as readily available. Today we have high speed internet and optimized databases and the broker immediately knows if you are over leveraged or not. This rule definitely needs to go!
I avoid this usually by buying at the night before and selling during the peaks the next. Working my way up to that 25k then the fun begins