Pattern trading?

Question

will someone please explain what pattern trading is and give some examples?

Thanks.

Answer 1

A pattern day trader is defined in Exchange Rule 431 (Margin Requirement) as:

1. any customer who executes 4 or more round-trip day trades within any 5 successive business days[2]
2. number of day-trades is more than 6% of the total trades in the account during that period

A non-pattern day trader (ie someone with only occasional day trading), can become designated a pattern day trader anytime if it meets the above criteria.

If the brokerage knows, or reasonably believe a client who seeks to open or resume an account will engage in pattern day trading, then the customer must immediately be considered a pattern day trader without waiting 5 business days.

Answer 2

One addional thought;

If you have over $25,000 in your account you should not be concerned about "pattern daytrading".