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If you’re a day trader, you're likely well aware of the pattern day trader (PDT) rule, which used to impose minimum balance requirements (historically $25,000) on traders who make a lot of transactions in a margin account.
The Financial Industry Regulatory Authority (FINRA) and the Securities and Exchange Commission (SEC) have just relaxed those requirements. On June 4, a change to margin rules came into effect that did away with minimum balance requirements for day traders.
Below, an overview of the old rule, the new changes, their pros and cons, and how quickly brokers are implementing the new rules.
What was the pattern day trader rule?
Under the old rules, FINRA used to define a pattern day trader as someone who, in a margin account, “executes four or more ‘day trades’ within five business days, provided that the number of day trades represents more than six percent of the customer’s total trades for that same five business day period.”
This effectively meant that some investors who placed a lot of long-term trades but do a little bit of day trading were exempt, but the opposite was also true sometimes — if you were placing only a handful of trades each week but the majority were day trades, you might've been considered a pattern day trader.
» MORE: Best platforms for day trading
Under the old FINRA rules, pattern day traders had to maintain a minimum account balance of $25,000.
This gatekept a lot of beginner, small-balance investors out of day trading, by design, to protect them from the substantial risks associated with it. The minimum was implemented in 2001, in the aftermath of the dot-com crash, when many retail traders suffered significant losses trading overvalued tech stocks. However, this rule, pattern day trader status, and the minimum balance rules associated with it are all gone now.
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How and when the pattern day trader rule changed
In late 2025, the FINRA Board of Governors approved amendments that would scrap the $25,000 minimum, and replace it with a more flexible intraday maintenance margin requirement. The SEC approved the change on April 14, and FINRA published a notice a few days later stating that the new rule is effective June 4.
Rather than needing to keep $25,000 in their accounts, day traders with margin accounts now just need to keep enough money in their account to avoid margin calls on their positions. This typically means maintaining a balance of at least 25% of the total value of their outstanding positions, although brokers are allowed to impose higher requirements of their own.
However, traders are still subject to FINRA regulations that require a $2,000 minimum account balance to make leveraged trades — that is, trades using borrowed money, and not available cash in their accounts — so investors with smaller balances will still be gatekept from day trading using borrowed money.
But there is no minimum balance requirement for margin account users who don't use leverage — that is, those who don't make purchases using more than the available cash balance in their accounts.
Now, a lot more investors are eligible to day trade stocks on margin, for better or worse.
How long will brokers take to implement the new rules?
Brokers are allowed to remove the old $25,000 minimum for pattern day traders starting June 4, but they have until October 20, 2027 to fully implement the rule change.
Some brokers reviewed by NerdWallet, such as Robinhood, Webull, Interactive Brokers and TastyTrade, changed their rules on June 4.
Charles Schwab will implement the rule changes on June 8, while E*TRADE will implement them on June 9. We will update this article as more brokers share their implementation timelines for the new rules.
Should you try out pattern day trading?
Even now that pattern day trading rules have been eliminated, there is still a $2,000 minimum for making leveraged trades, which could still present a hurdle for some small-balance investors. But there are several ways to avoid the rule.
The simplest, and perhaps most obvious, is to avoid day trading entirely and stick to long-term investing. Recent studies suggest that day trading is not a winning proposition for most investors, especially retail investors who use brokerage apps.
For example, a 2021 study published in the Journal of Finance looked at the top stocks purchased by Robinhood users each day from May 2018 to August 2020 . It found that the average 20-day return on these stocks was -4.7%, implying that many if not most short-term traders on Robinhood end up losing money.
By contrast, historical data shows that long-term investments in index funds have much more reliable returns — the S&P 500 index, for example, has a long-term average annual return of about 10% per year.
Day trading without leverage: A workaround under the new standards
As of June 4, the only minimum balance requirement for day trading is a $2,000 minimum on investors who use leverage — so now, one workaround is simply to avoid using leverage (i.e., only make purchases that are smaller than your available cash balance), in which case there is no minimum balance requirement. Using leverage is risky in general, so this workaround may be especially suitable for investors who want to try day trading but also want to play it safe.
» MORE: Best platforms for day trading
A previous version of this article incorrectly stated that the new minimum margin requirement for leveraged trades is an overall minimum balance requirement for margin accounts. This article has been corrected.
Article sources
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- 1.Investor.gov. Pattern Day Trader. Accessed Oct 2, 2025.
- 2.FINRA. FINRA Adopts New Intraday Margin Standards to Replace the Day Trading Margin Requirements. Accessed Apr 22, 2026.
- 3.FINRA. Understanding the New Intraday Margin Requirements. Accessed Apr 22, 2026.
- 4.Securities and Exchange Commission. Release No. 34-105226; File No. SR-FINRA-2025-017. Accessed Apr 22, 2026.
- 2.FINRA. FINRA Adopts New Intraday Margin Standards to Replace the Day Trading Margin Requirements. Accessed Jun 4, 2026.
- 6.Journal of Finance. Attention‐Induced Trading and Returns: Evidence from Robinhood Users. Accessed Oct 2, 2025.
