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What is day trading?

A day trade is when an investor buys and sells a financial instrument once or multiple times during a single trading day.  

What is Pattern Day Trading?

A day trade is defined as the purchasing and selling or the selling and purchasing of the same security on the same day.
Investors will be marked as Pattern Day Traders (PDT) if they execute four "day trades" in a rolling period of five trading days. If you’re marked as a Pattern Day Trader, you may be restricted from making additional "day trades" for 90 days or more.

Important to Note

PDT rules come from the U.S. regulatory body FINRA, not from Stake. If you’re designated as a PDT, your ability to place "day trades" will be restricted for the allotted time. This means that if you buy into a security in a given day you are restricted from selling out of the same security on the same day and vice versa.

Investors marked as Pattern Day Traders could face further restrictions beyond the initial 90 days, these are at the discretion of FINRA and our U.S. broker-dealer, DriveWealth.

Exemptions from PDT

Restrictions only apply to PDT account balances under US$25,000.

Your PDT account balance consists of: 

• Total settled cash; 
• Unsettled stock sale proceeds; and 
• The value of held securities (not on loan via Stock Lending)

For this exemption to apply, your total PDT account balance must be over US$25,000 at the beginning of a given trading day. Stock Lending may reduce your PDT account balance, you may wish to opt out of Stock Lending to avoid PDT restrictions applying if marked as a Pattern Day Trader. Please contact our support team should you have any queries.

Please note that while PDT account balance is calculated using the above metrics, only settled funds/buying power can be used to place a buy order.  

What if I’m marked as a Pattern Day Trader? 

If you’re ever marked as a Pattern Day Trader and would like to remove the trading restriction, you can fund your account above US$25,000 for the above exemption to apply. All deposits to your Wall St account (including FastFunds deposits) only count towards your PDT account balance when the cash settles. You will need to maintain this minimum PDT account balance for each trading day you intend on placing buy orders. 

Stake Day Trade Counter 

To keep our customers on the right side of the rules, we’ve built a Day Trade Counter that allows you to keep track of your day trade count at any time. You can access this on the Stake app by tapping More > Settings > Trade settings > Day trade settings > Day trade protection. 

We will also notify you as you place consecutive day trades up to and including your fourth.  You’ll be alerted of the potential impact of placing a fourth day trade, however, you’ll always retain the right to place it if you choose to. If you have any questions about PDT, you can get in touch with the Stake support team here.
  

PDT and Stock Lending

If you participate in Stock Lending with Stake and a portion of your equities are currently on loan, the value of loaned equities is not included in your account balance for PDT purposes (i.e. your PDT account balance).

As this can impact eligibility for the PDT rule exemption, you may wish to opt out of Stock Lending to avoid PDT restrictions applying if marked as a Pattern Day Trader. 

You can opt out of Stock Lending at any time by opening your Wall St Account and clicking on Settings > Trade settings > Stock Lending settings > Turn off Stock Lending.

Day trading examples 

We know day trading can get confusing, so here are some practical examples.  

One Day Trade
Example 1: Buy, Sell 
You start a trading day with 0 shares of AAPL and place the following trades.
   Buy 1 AAPL     
   Sell 1 AAPL 

This constitutes a day trade, because you bought then sold AAPL on the same trading day.
Day trade = Buy 1 AAPL, Sell 1 AAPL 

Example 2: Sell, Buy, Sell 
You already own 100 shares of AAPL.     
   Sell 20 shares AAPL     
   Buy 10 shares AAPL     
   Sell 10 shares AAPL 

This constitutes one day trade. Since you already owned positions, the first sell doesn’t count towards a day trade. 
   Day trade = Buy 10 AAPL, Sell 10 AAPL 

Example 3: Buy, Buy, Buy, Sell, Sell, Sell 
You currently hold 0 shares of AAPL.     

   Buy 5 AAPL     
   Buy 3 AAPL    
   Buy 2 AAPL     
   Sell 1 AAPL     
   Sell 4  AAPL    
   Sell 2 AAPL

This is one day trade because there is only one change in direction between buys and sells.
   Day trade = Buy 5 AAPL, Buy 3 AAPL, Buy 2 AAPL, Sell 1 AAPL, Sell 4 AAPL, Sell 2 AAPL

More Than One Day Trade 
Example 1: One stock 
You currently hold 0 shares of AAPL     
   Buy 100 AAPL     
   Sell 20 AAPL     
   Sell 40 AAPL     
   Buy 10 AAPL     
   Sell 10 AAPL 

This constitutes two day trades, as there were two changes in direction.
   Day trade 1 = Buy 100 AAPL, Sell 20 AAPL 
   Day trade 2 = Buy 10 AAPL, Sell 10 AAPL 

Example 2: Two stocks 
You currently hold 0 shares of AAPL or NFLX     
   Buy 100 AAPL     
   Buy 20 NFLX     
   Sell 40 AAPL  
   Sell 10 AAPL    
   Sell 10 NFLX     

This constitutes two day trades – there were two changes in direction, one per stock.
   Day trade 1 = Buy 100 AAPL, Sell 40 AAPL
   Day trade 2 = Buy 20 NFLX, Sell 10 NFLX 

Example 3: Across multiple trading days 
   You currently hold 0 shares AAPL or NFLX      
   Buy 100 AAPL (Monday)     
   Sell 40 AAPL (Monday)     
   Sell 10 AAPL (Tuesday)     
   Buy 20 NFLX (Wednesday)     
   Sell 10 NFLX (Wednesday) 

This constitutes two day trades (one on Monday and one on Wednesday) as a change in direction within the same day occurred twice within a five trading day period.
   Day trade 1 (Monday) = Buy 100 AAPL, Sell 40 AAPL 
   Day trade 2 (Wednesday) = Buy 20 NFLX, Sell 10 NFLX