Robinhood Day Trading Rules

Robinhood day trading rules

When you first join the Robinhood application, it is essential to know the regulations regarding the day trading rules.

The application has strict rules around how one can make day trades to avoid significant stock manipulations.

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 at least four days 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 is My Withdrawable Cash $0 On Robinhood?

How Do You Avoid Pattern Day Trading On Robinhood?

There are ways you can inadvertently cause the pattern day trading filter to catch your account activities. However, there are features in the Robinhood application that can help you avoid having to deal with these issues. Here are the steps you need to follow- 

  • Select the Account icon at the bottom of your application screen.
  • Select the Account Summary option.
  • You can scroll down and select the Day Trade Settings
  • Click on the Pattern Day Trade Protection on or off

Is It Legal To Buy And Sell The Same Stock Repeatedly?

No, it is not legal to buy and sell the same stock repeatedly. Any Robinhood account user is not allowed to buy or sell a stock within the intraday and not more than four times in a business week period.

It will be tagged as a form of pattern trading and will lead to your account being restricted for more than 90 days. You can buy a stock around the time of closing time on a business day and start to sell on the next opening day.

How Many Times Can You Trade In A Day On Robinhood?

Any user that doesn’t have more than $25,000 (without cryptocurrency taking into account) can only make up to four-day trades in a given week. You will be penalized under the Robinhood rules and regulations if you violate this rule.

Also Read: Is Robinhood Legal and Safe?

Final Thoughts 

You have now learned about what are the rules and regulations around day trading in the Robinhood application. The best way to day trade freely is to meet the requirements of the $25,000 or focus on cryptocurrency markets till then.

Frequently Asked Questions

Why Does Robinhood Limit Day Trading?

Generally, you will be limited to the amount of money you have in your Robinhood account to make day trades. However, you can always take on credit to make trades in Robinhood, which is beyond your current money in the account. There are risks that you may lead to a negative amount, and they may sell your investments.

Does Bitcoin Count As Day Trading Robinhood?

No, it is not considered under the day trading rules as the cryptocurrencies are not regulated under SEC and other federal laws.