# The Pattern-Day Trader (PDT) Rule
The year is 2023. You can smoke crack on the streets of San Francisco, you can take a magic weight loss shot that *definitely* has no side effects, but you as an adult human are not allowed to daytrade a **margin account** without a minimum balance of $25,000.
### Pattern Day Trader (PDT) Rule Explained:
If you execute four or more “day trades” within a rolling five trading day period, you will be flagged as a pattern day trader.
Once you’re flagged as a pattern day trader, the required minimum balance in your margin account is $25,000 (includes stock and options, not internet coins).
**How serious is the rule?**
Four day trades in a five day period and you're permanently locked in PDT purgatory.
**What counts as a day trade?**
Robinhood example:
10:30 AM - Buy 1 $SPY 455c\
10:40 AM - Sell 1 $SPY 455c\
\
That’s a day trade and will use one of your three.
You can always size up by purchasing multiple contracts at the same strike before selling.
Multiple buy example:
10:30 AM - Buy 1 $SPY 455c\
10:40 AM - Buy 3 $SPY 455c\
11:20 AM - Sell 4 $SPY 455c
Since you are buying multiple contracts at the same strike (though at different times and prices) and then closing them all at once, it counts as 1 day trade.
## Why PDT Purgatory Absolutely Sucks!
It's pathetic that you can go into a casino and spend every dollar the child support and all without any kind of verification or check.
But you cannot daytrade a margin account with less than $25,000.
What's more dangerous!?!?
Surely trading 0DTE options has better outcomes than playing 000 roulette.
The real problem is this:
If you are limited to three trades per week, it will always be in your mind. You'll think about it when you enter, you'll think about it when you're holding the trade and you'll think about it before you exit.
Trading is hard enough!
You do not want to be thinking "oh should I use one... I don't want to miss the next one... mmm I'm not sure if I want to waste one of my lives".
RIGD is for the people, so we've come up with a few ways to circument (but not avoid the rules).
***
### Option 1 - Use Multiple Brokerages
Your brokerage is not your wife.
You can have multiple brokerage accounts and just rotate them when you hit the three trade limit per week.
[Robinhood (aff link) ](https://join.robinhood.com/benjamh279)- easy to use, plus they make money off of order flow (selling your order to Citadel) which makes it fast to get in and out of trades. Why is it fast? Because they're executing at a low price.
[WeBull](https://webull.com/) - another furu favorite, we haven't used the platform very much but the minimum balance required for a margin account is $2,500.
[E\*trade](https://etrade.com) - this is the easiest somewhat more advanced platform. The minimum balance for margin accounts may have changed since writing this.
### Option 2 - Switch to a Cash Account
Cash accounts are slightly less fun.
They're pretty self-explanatory but we like hearing ourselves talk so we'll do it anyway.
{% hint style="info" %}
Cash accounts are basically like using a debit card without overdraft protection.
{% endhint %}
They aren’t subject to the PDT regulations, so you can daytrade as long as you have dollars in the account.
The problem is... you cannot use unsettled funds. Option trades take one day to settle.
You open and close a trade on Monday, the money will be available to trade again on Wednesday.
###
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