PDT Explained (Last Update: 10/18/13) Summary: If your account has less than $25,000 in capital, you won't be able to make more than 3 trades in a 5 day period. Should you execute more than 3 day trades, your account will be placed on restriction. The number of trades you OPEN dictates the number of day trades used.
One thing to understand before moving forward. There are two types of accounts you can have at a brokerage. The first is a cash account. Unless you specifically request a margin account (assuming you're approved), you will always begin with a cash account. If you have a cash account, you don't have to worry about the PDT Rule. You can day trade your heart out.For example, you have $10K in capital. Assuming no commission factored in, you can make 1000 x $10 trades if you wanted to. Go bananas.
If you have less than $25,000, you can ask and be approved for a margin account. However, the PDT Rule then applies to you. The only advantage with this method is the increased amount of capital (AKA leverage) you're given to trade with. For example, even though your account has $5,000, you're allowed to trade as though you had $50,000 (10:1 leverage). If you violate the PDT Rule, tell your broker you didn't know. Usually they'll forgive the first offense.
Even if you have $25k in capital ready to be deposited, some brokers will not allow you to run a margin account based on your (low) level of stock experience. I know for a fact Interactive Brokers is one of these brokers. (They rejected me for a cash account back in late-2011 when I was new to trading.)
Recap: Cash Account (over or under $25,000) = Day trade all you want, limitation is capital. PDT Rule doesn't apply. Margin Account (under $25,000) = 3 day trades in a 5 day period. Margin Account (over $25,000) = Day trade all you want.
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