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.
Read more about this topic: Pattern Day Trader
Famous quotes containing the words defined, cash and/or accounts:
“The depth and strength of a human character are defined by its moral reserves. People reveal themselves completely only when they are thrown out of the customary conditions of their life, for only then do they have to fall back on their reserves.”
—Leon Trotsky (1879–1940)
“Better eight hundred in cash than a thousand on credit.”
—Chinese proverb.
“Good friends settle their accounts speedily.”
—Chinese proverb.