The Pattern Day Trading (PDT) rule is a regulation set by the Financial Industry Regulatory Authority (FINRA) in the U.S, and applies to anyone trading stocks listed on a U.S. exchange.
The Pattern Day Trading (PDT) rule restricts accounts with less than 25,000 USD equity on the last trading day to 3 day trades every 5 business days. If you exceed the limit, you’ll be flagged as a Pattern Day Trader and your account will be restricted to only selling the stocks you own for 90 days. To protect users from exceeding this limit, Kraken tracks your day trades in real time and will prevent you from buying more stocks if you have already executed 3 days trades in a 5 day period.
- •A day trade is when you buy and sell (or sell short and buy) the same stock on the same trading day.
- •The last trading day equity is the sum of your stocks (adjusted by their settlement value) in USD in your account at the end of the previous trading day.
How do I know if the PDT rule applies to me?
You can see your PDT status and how many day trades you have left in the Order form.
What if I reach the limit?
If you make three day trades within a five-day period and have less than $25,000 in stocks and ETFs in your account, you will not be able to place any additional Buy trades until your limit resets. If your equity account balance is over $25,000 at the end of the previous trading day, you may continue to day trade without restrictions.
Otherwise, you’ll need to wait for the five-day period to reset before you can make new Buy trades.