Don’t worry if you are a Robinhood user and have been notified that your account has been labeled as a Pattern Day Trader! This doesn’t mean that your account has been frozen or anything like that. It just means that your account is now subject to different rules and regulations.
In this blog post, we’ll show you how to remove Pattern Day Trader status from your Robinhood account. So don’t worry – you’re not in trouble, and you can continue using your Robinhood account as usual!
What Is A Pattern Day Trader In Robinhood?
A pattern day trader account by FINRA (regulators of Robinhood) is a type of account created for active traders who buy and sell multiple times in one trading day. Pattern day trader accounts are for people who know how to invest money, can pay attention to the market while still doing their day job, and who have time during the day to trade.
There are different types of accounts to use when trading stocks. Some have higher minimums or conditions that must be met before you can get started, while others are open to everyone with no restrictions.
How To Remove Pattern Day Trading Status On Robinhood?
You have two methods at your disposal to remove the Pattern Day Trader Status on Robinhood:
- In the first method, you’re required to fund your margin account and ensure that the account value is always more than or equal to $25000. You need to choose the option quickly. You can save yourself from penalties by successfully depositing the amount and maintaining the required $25000 balance before the market closes.
- The second method involves waiting for about 90 days before initiating new positions. On behalf of your broker, you can ask for a pattern day reset. This is a good option as FINRA lets the brokers remove the Pattern Day Trader Flag from their customer’s accounts every 180 days.
Once you’re freed of the penalty, you’ll be able to day trade at the same pace, i.e., three-day trading over five working days.
Steps to Remove the Pattern Day Trading Status:
Step 1: Find the account icon in the bottom right corner.
Step 2: Click on it to open your account details.
Step 3: Click on “Account Summary”.
Step 4: Scroll down to find and select the option “Day Trade Settings”.
Step 5: Toggle the Pattern Day Trade Protection Off”.
Also Read: How to Avoid Robinhood Transfer Fee?
Can You Get Rid Of Pattern Day Trader Status?
Yes, you can get rid of Pattern Day Trader Status on Robinhood by disabling it. Though, you can get a notification if you’re short on the required $25000 if you place a three-day trade in five business days. Your only option then is to cancel the trade as else, you’ll be flagged as a day trader.
What Are The Robinhood Day Trading Rules?
Robinhood has day trading rules they use to ensure financial investors. One of the enormous ones is the PDT (pattern day trading) rule. When you day trade, you might be comfortable with the rule.
The rule states that Robinhood clients can’t put four or more day trades inside a five-day time span — except if they have more than $25,000 in their account.
However, if you go over the three-day or multi-day trade, Robinhood will confine your account from putting further day exchanges for 90 days.
This rule doesn’t matter to the trades which happened overnight. It just alludes to trading stock or choices contracts during the day, something like three in five workdays.
This rule applies to dealers utilizing any financier firm and was presented by the Financial Industry Regulatory Authority (FINRA) to secure financial investors.
Nonetheless, for informal investors utilizing Robinhood, there are a few exceptions.
However, if these trades of three days are not exactly the all-out trades with the margin account, the limitations don’t matter. Nonetheless, that situation is generally improbable to happen.
One more way around this issue is to downsize to a Robinhood Cash account since clients of Cash accounts don’t approach margins. This FINRA rule will not make a difference by not utilizing margin exchanging.
There are sure many things to consider to execute at least four trades and choose to up your account surplus to more than $25,000.
To start with, your account total isn’t formally more than $25,000 unless the cleared deposit. Also, the margin presented in Robinhood Instant accounts won’t combine with the total.
For example, in the event that you have $20,000 in your Robinhood record and top it up to more than $25,000, you want to delay until the cleared deposit before you can day trade. This commonly takes around five days.
Also Read: Why Can’t I Withdraw Money From Robinhood?
Robinhood Day Trade Limit
For the most part, you’re restricted to something like three-day or multi-day trades with a 5 trading day time span, except if you have basically $25,000 of portfolio esteem in your Instant or Gold account toward the finish of the earlier day.
How To Day Trade On Robinhood Without 25k?
Yes, you can day trade on Robinhood without 25k. Some restrictions are applied to the traders with Robinhood standard and the Robinhood gold accounts. Users who have cash accounts can trade without any restrictions.
How Many Day Trades Can You Make On Robinhood?
A user is limited to trades of up to three in five trading days if the user has $25,000 of funds in their Instant or Gold account.
Can I Day Trade On Robinhood?
Yes, you can day trade on the Robinhood.
What Happens If You Are Marked As A Pattern Day Trader On Robinhood?
Assuming you day trade while set apart as a pattern day trader, and finish the last trading day underneath the $25,000 value necessity, you will be given a day exchange violation and be confined from buying (stocks or choices with Robinhood Financial and digital money with Robinhood Crypto) for 90 days.
Also Read: How to Reactivate Robinhood Account?
Final Thoughts
This article gives an overview of the rules surrounding day trading with Robinhood. It provides information on the margin account and how it operates.
If you plan to day trade while using a Robinhood account, it’s important to know the rules and precautions that come with it.
It is vital that you check out the restrictions before doing so. If done correctly, you can take full advantage of your account.
