I understand youre allowed only 3 trades per week if you are under the PDT rule. However, Im alittle confused about what a trade means I understand that if you buy a stock and then sell it on the same day thats 1 trade However, what if I shorted 10 shares of stock and then 10 more an hour later with me selling all of it an hour after that . Does this count as 2 trades or just 1? Sorry for the noob question but any info would be of great help. Thank you
This is considered as 1 day-trade under the PDT US rule. Under the PDT rule, a day-trade is defined as when you open + close a position within the same day. But I believe it's max 4 trades per week, not 3 as you mentioned.
According to FINRA rules, you are considered a pattern day trader if you execute four or more "day trades" within five business days—provided that the number of day trades represents more than six percent of your total trades in the margin account for that same five business day period. + + + I would add in a margin account.
PDT rules only apply if you are trading margins, in which case you must maintain $25K in your account. With a cash account, you can trade as often as you want, although you will need to wait for your sales to settle if you are on a tight budget. You should familiarize yourself with the actual rule https://www.investor.gov/introduction-investing/investing-basics/glossary/pattern-day-trader And address any questions to your brokerage firm to be sure of their policies.