Pattern day trading | Robinhood (2023)

Pattern day trading rules were defined by FINRA, one of our regulators. We’ve gone a step further and provided you with tools you can use to make sure you’re investing responsibly.

You’ve made a day trade when:

• You buy and sell (or sell and buy) the same stock or ETP within a single trading day
• You open and close the same options contract(s) within a single trading day

You’ll be considered a pattern day trader if you make 4 or more day trades within 5 trading days, and the number of day trades represents more than 6% of your total trades within your margin brokerage account for that same 5 trading day period. This rule only applies to margin accounts (including Instant) and if your account is marked PDT, you are required to have a portfolio value of at least $25,000 to continue day trading. Your portfolio value is the sum of your cash, stocks, and options, and doesn’t include crypto positions.

Your portfolio value may fluctuate above $25,000 at some point during the trading day, but we only take into account the closing balance of the previous trading day.

To verify in the app whether you are restricted from day trading or not on any given day, check your Day trade counter.

Additionally, the 5 trading day window doesn’t necessarily align with the calendar week.

When you place an order, it won’t actually count as a day trade unless it executes. You might see an open order that’s been placed but not executed in your Day trade counter. This helps alert you ahead of time that if your order executes, it’ll count as another day trade.

To see how many day trades you’ve made in the current 5 trading day period in the app:

1. Select Account → Settings (gear) or menu (3 bars)
2. Select Investing → Day trades made

If you're currently flagged as a pattern day trader, you may be eligiblefor a one time removal of your pattern day trading flag and/orassociated restrictions. View your options here.

Pattern Day Trade Protection alerts you when you are about to place a fourth day trade. This feature will give you the option to proceed with the fourth trade, or cancel it to avoid being marked as a pattern day trader. For more details, check out Pattern Day Trade Protection.

Orders usually execute all at once, but occasionally you might see multiple or partial executions. This sometimes happens with large orders, or with orders on low-volume stocks. For regulatory purposes, each execution counts toward your day trade count, so trading low-volume stocks or placing especially large orders may increase your chances of executing a day trade.

If you've been flagged as a pattern day trader (PDT), you can still sign up for the brokerage cash sweep program, but you won’t be eligible to earn interest until your PDT flag is removed. If you're flagged as a PDT while enrolled in the brokerage sweep program, you'll be unenrolled from the brokerage sweep program and will have your cash swept back from program banks. Any accrued interest will be paid to your brokerage account, but you will not accrue any additional interest until you are unflagged as a PDT.

The reason we disable participation in the brokerage sweep program when you’re flagged as a PDT is that cash at program banks doesn't count toward the $25,000 minimum needed to continue day trading. Swept cash also doesn’t count toward your day trade buying limit. Enabling pattern day traders to participate in the brokerage sweep program would result in a number of potential day trade calls for those customers, so the industry standard is to disable these programs for PDTs. See FINRA Rule 4210(f)(8)(B) for more details on the definition of and requirements applicable to PDTs.

While your Robinhood account is flagged for PDT, you’re ineligible to participate in Stock Lending, even with $25,000 or more in your margin accounts (Gold and Instant). Until the PDT flag is removed, the Stock Lending option will be disabled, and any stock that you have loaned will be returned to your account.

We disable Stock Lending until you’re no longer flagged as a PDT because any stock loans don’t count toward the $25,000 minimum.

Understanding day trading can be really complicated, so here are some examples of what is and what isn’t a day trade.

All investments involve risks, including the loss of principal. Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Before using margin, customers must determine whether this type of trading strategy is right for them given their specific investment objectives, experience, risk tolerance, and financial situation. For more information, review Robinhood Financial’s Margin Disclosure Statement, Margin Agreement and FINRA Investor Information. These disclosures contain information on Robinhood Financial’s lending policies, interest charges, and the risks associated with margin accounts.

Options trading entails significant risk and is not appropriate for all investors. Certain complex options strategies carry additional risk. Robinhood Financial does not guarantee favorable investment outcomes and there is always the potential of losing money when you invest in securities, or other financial products. Investors should consider their investment objectives and risks carefully before investing. To learn more about the risks associated with options, read the Characteristics and Risks of Standardized Options before engaging in any options trading strategies. Supporting documentation for any claims, if applicable, will be furnished upon request. Also, be aware of the risks listed in the Day Trading Risk Disclosure Statement.

The Brokerage Cash Sweep Program is an added feature to your Robinhood Financial LLC brokerage account. When enrolled, interest is earned on uninvested cash swept from your brokerage account to program banks. Program banks pay interest on your swept cash, minus any fees paid to Robinhood. Neither Robinhood Financial LLC nor any of its affiliates are banks.

Securities trading is offered through Robinhood Financial LLC, member SIPC and FINRA. Robinhood Securities, LLC is a registered broker dealer (member SIPC) and provides brokerage clearing services. Crypto trading is offered through Robinhood Crypto, LLC. Robinhood Crypto is not a member of SIPC or FINRA. Crypto are not stocks and your crypto investments are not protected by either FDIC or SIPC. Robinhood Securities, LLC and Robinhood Crypto, LLC are subsidiaries of Robinhood Markets, Inc. (‘Robinhood’).

Reference No. 2740342