Pattern Day Trader Rule: Gone Since 4 June 2026, and What Replaced It

Michael Whitman · Trading since 2017, full-time since 2020 · YouTube creator, 137K subscribers · Published 2026-09-06 · Updated 2026-11-02 · Reviewed 2026-11-01

The pattern day trader rule was a FINRA margin rule that flagged any margin account making four or more day trades in five business days and then required $25,000 of equity before it could keep day trading. It no longer exists: FINRA removed it on 4 June 2026 and put an intraday margin check in its place, though brokers may keep the old rule while they switch over, up to 20 October 2027.

So the honest answer to “does the PDT rule apply to me?” in November 2026 is: not under FINRA’s rulebook, possibly under your broker’s. Everything below is dated, and every rule figure was read on finra.org or in the Federal Register on 1 November 2026.

How it works: the old test, and its end

The old test had two parts. A day trade meant opening and closing the same security on the same day. Four or more of them inside five business days made you a pattern day trader, unless day trades were 6% or less of all your trades in that window. Hold a position past the close and it was not a day trade at all.

The flag brought three things. You had to keep $25,000 of equity in the account at all times, deposited before any further day trading. You got day-trading buying power of four times your maintenance margin excess, set by the 2001 SEC order. And if a day-trading call went unmet for five business days, the account could trade only on a cash-available basis for 90 days.

The rule was adopted in 2001 and lasted almost 25 years. The SEC approved the NYSE and NASD versions on 27 February 2001 (Release 34-44009). FINRA filed to replace it (SR-FINRA-2025-017), the SEC approved that on 14 April 2026 (Release 34-105226), and FINRA announced it in Regulatory Notice 26-10 on 20 April 2026, calling the old requirements “outdated”.

The rulebook now shows the gap. On finra.org today, paragraph (f)(8)(B) of Rule 4210, where the day trading text lived, reads “Reserved.” The amendment history lists the 4 June 2026 change and one later change effective 22 October 2026 (SR-FINRA-2026-022), which deals with binary options and other new option types, not with day trading.

What replaced it: the intraday margin check

The new rule measures exposure after each trade that uses up margin. FINRA calls the measure the intraday margin level, or IML: roughly, how much cash you could take out and still meet maintenance margin, or how much you are short of it. A purchase, a short sale or a withdrawal that lowers the IML is an “IML-reducing transaction”. On any day with one, the firm must find the account’s intraday margin deficit, at least the size of the most negative IML that day.

A deficit has to be covered as promptly as possible. Deposits or trades that raise the IML from the end of that day onward count. A deficit stays on the books until it is covered or until the close of the 15th business day after it happened.

The 90-day freeze is still there, but the trigger changed. It now applies when a customer makes a practice of covering deficits late and one is still open at the close of the fifth business day. Deficits no larger than the lesser of 5% of the account’s equity or $1,000 do not count toward that practice. During the freeze the account cannot open or add to a short position or a debit balance.

Two things did not change. Rule 4210(b) still requires at least $2,000 of equity in a margin account, and maintenance margin on long stock is still 25% of market value under Rule 4210(c). Firms may set stricter house rules than either, and many do.

A worked example: one week of SPY day trades

Take a $10,000 margin account with no positions and no house rule above the FINRA minimums. Each day from Monday 26 October to Friday 30 October 2026 it buys 25 shares of SPY at the opening price and sells them at the close. The prices are real SPY daily bars; the account is hypothetical.

Under the old rule, Thursday was the fourth day trade in five business days. The account, which entered Thursday with $10,158.00 of equity, became a pattern day trader. By Thursday’s close it held $10,172.25, still $14,827.75 short of $25,000, so Friday’s round trip would not have been allowed until the money arrived.

Under the new rule the count does not matter. On Monday, equity of $10,000.00 minus 25% of the $19,056.25 position leaves an IML of $5,235.94, comfortably positive. Each later morning starts from the previous day’s equity, so on Friday it is $10,172.25 minus 25% of $19,034.50, or $5,413.62. No day produced a deficit.

The week ended $30.75 ahead before costs, with $10,030.75 of equity. The five sales also owed about $1.97 in SEC fees between them, the kind of charge the trading fees page totals up. A $25,000 account would have seen the same result; the only difference the old rule made was whether Friday was allowed.

What would create a deficit here is size. At 25% maintenance, equity supports long stock worth four times itself before the IML turns negative: $40,000 on Monday’s $10,000, and $40,689.00 on Friday’s $10,172.25, so 54 shares at Friday’s $761.38 open would have done it. That is the same ceiling the old buying power gave a flagged account, now applied to every margin account and judged by exposure rather than by the number of trades.

The original data

The $25,000 minimum was set once and never raised. Using the official consumer price index (CPI-U), $25,000 in February 2001, the month the SEC approved the rule, equals $47,440 in May 2026, the last full month before it ended. Turned the other way, $25,000 in May 2026 bought what $13,174 bought in 2001: a 47.30% fall in real value. The real-value file lists every May.

So the bar fell in real terms every year it existed except one. The only rise in the series is May 2009, when prices dipped after the financial crisis. The cash amount stayed the same while the account it described kept getting smaller in real terms.

Video makers moved on the change fast. In the 24,971-video corpus measured for this site, 12 titles name the rule (pattern day trader or PDT), at a median of 24,580 views. Seven of the 12 are about the 2026 change (“gone”, “eliminated”, “killed”, “new PDT rule”, “rule change”), at a median of 15,676 views, against 71,486 for the five older explainers. That is a small sample; it shows what creators made, not what viewers needed.

The worked example’s prices come from SPY’s daily bars on Yahoo Finance, and all five opens and closes match Nasdaq’s historical quotes to the cent. The five-day file holds every figure in the table.

Cash accounts and the phase-in

A cash account was never under the PDT rule, because nobody lends you anything, and the new intraday standard covers margin accounts only. The limit there is settlement: stock sales settle one business day after the trade, and buying with unsettled money and selling before it settles is a good-faith violation. Brokers commonly restrict a cash account after several of those.

The phase-in is the part that catches people out. FINRA let firms that need more time take up to 18 months, ending 20 October 2027. Until your broker says it has switched, assume its own margin page, not this rulebook, decides what you can do on a given day.

When it fails

The new check is a lending test, not a safety net. An account can stay inside its IML every day and still lose money every day; Friday’s $141.50 loss in the example met every rule there is.

Leverage now scales with equity, not with a threshold. Under the old rule a $10,000 margin account was capped near two times its equity. Under the new one, maintenance math alone allows positions up to four times equity during the day, unless the broker’s house rule is tighter. A 25% drop in a fully used position wipes out the equity.

Late deficits still lead to a freeze. The 90-day restriction did not go away; it now follows from repeatedly covering deficits slowly. Traders who hear “the PDT rule is gone” and stop reading are the ones most likely to meet it.

And workarounds built for the old rule are now pointless. Spreading trades across several brokers, or moving to an offshore one to dodge the count, solved a problem the rulebook no longer has, while keeping the extra risk each move carried.

Questions people ask

Is the PDT rule gone?

Yes, from FINRA’s rulebook: the change took effect on 4 June 2026. Brokers that need more time may keep the old rules until 20 October 2027, so check yours.

How many day trades can I make with under $25,000?

Under the new FINRA rule, there is no count. Under a broker still using the old rule, three in any five business days in a margin account is the most before the flag.

What happens if I already have a PDT flag?

The designation itself no longer exists in Rule 4210. Whether your broker has cleared it depends on where that broker is in its switchover, so ask it directly.

Does any of this apply to a cash account?

No. A cash account was never covered by the PDT rule and is not covered by the intraday margin standard; settlement rules limit it instead.

Related

The rule always lived inside a margin account, where the maintenance arithmetic behind the new check is worked through. Day trading covers the activity itself, which no margin rule makes worth doing or not. And a stop-loss shows why holding overnight, the old way to avoid the count, swaps one risk for another.

This page is educational, not financial advice. Test every idea on your own charts before risking money.