Pattern Day Trader - Not Defined For Cash Accounts

Not Defined For Cash Accounts

The Pattern Day Trading rule regulates the use of margin and is defined only for margin accounts. Cash accounts can not use margin, so there is no way to further restrict their use of margin, so there is no rule to classify them as engaging in Pattern Day Trading. They may still engage in day trading, even at a frequency that would classify a margin account as engaging in Pattern Day Trading, as long as this does not result in free riding, the selling of securities bought with unsettled funds before the funds have settled. Any instance of free-riding will cause a cash or margin account to be restricted for 90 days from purchasing securities with unsettled funds.

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