What is Day Trading? What is a Pattern Day Trader?

Day Trading involves buying and selling the same security in the same trading day. It is a short-term strategy that seeks to take advantage of small movements in price in highly liquid stocks.

The Securities and Exchange Commission (SEC) defines a Pattern Day Trader as:

  1. a trader who places FOUR or more day-trades per day for a 5 day period, and
  2. a trader for whom day trading constitutes more than 6% his activity for a 5-day period.

Day Trading is only permitted in accounts with margin privileges. There is a minimum maintenance requirement of $25,000 in equity at all times in order to support the risks associated with day-trading activities.

We may consider you a pattern day trader if we have a reasonable basis to believe that you are adopting a day-trading strategy. If you are looking to change your strategy, you can contact us at support@kapitallgen.com.

For more information on Day-Trading Margin Requirements, you can check out this FINRA FAQ on Advanced Investing.

Risks Associated with Margin

Margin investing involves greater risks and is not appropriate for every investor. Before using margin, you should carefully review the Margin Disclosure statement that was provided to you when you opened your account (a copy is available in Kapitall's Terms and Conditions). You should also evaluate your investment objectives, financial resources and risk tolerance to determine if margin is appropriate.

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