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In the [[United States]], a '''pattern day trader''' is a [[Financial Industry Regulatory Authority]] (FINRA) designation for a [[stock trader]] who executes four or more [[Day trading|day trades]] in five business days in a [[margin account]], provided the number of day trades are more than six percent of the customer's total trading activity for that same five-day period.<ref>{{cite web|title=Pattern Day Trader|url=https://www.sec.gov/fast-answers/answerspatterndaytraderhtm.html|website=SEC.gov|publisher=[[Securities and Exchange Commission]]|date=February 10, 2011|accessdate=June 1, 2020}}</ref>
A FINRA rule applies to any customer who buys and sells a particular security in the same trading day (day trades), and does this four or more times in any five consecutive business day period; ''the rule applies to margin accounts'', '''but not to cash accounts'''. A pattern day trader is subject to special rules. The main rule is that in order to engage in pattern day trading you must maintain an equity balance of at least $25,000 in a margin account. The required minimum equity must be in the account prior to any day trading activities. Three months must pass without a day trade for a person so classified to lose the restrictions imposed on them. Pursuant to NYSE 432, [[brokerage firm]]s must maintain a daily record of required margin.
The minimum equity requirement in FINRA Rule 4210 was approved by the [[Securities and Exchange Commission]] (SEC) on February 27, 2001 by approving amendments to NASD Rule 2520.<ref name="ref2" />
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