A day trader is someone who purchases a stock and sells it within a five day period. (Check out the day trading node for more information). If a person day trades more than 4 times in a five day period then he or she is labeled as a pattern day trader. In order to ever again be able to day trade on margin, a pattern day trader must hold equity in his or her portfolio worth $25,000+ or that person is subject to day trading with cash only. This SEC ruling has been in effect since 1996.

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