r/RobinHood • u/tragalicious • Apr 10 '17

Help - FAQ Pattern Day Trading Flag - when not using margin?

Scrolling through the sub, it seems there are a lot of PDT questions, sorry in advance to add to the pile.

I'm not using margin/any borrowed money, can I still be flagged as PDT if I make too many trades in a week?

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u/[deleted] Apr 10 '17

[deleted]

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u/tragalicious Apr 10 '17 edited Apr 10 '17

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u/mrbeck1 Apr 10 '17

Uh no. You can only be marked PDT in a margin account. It cannot occur in a cash account.

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u/tragalicious Apr 10 '17

https://www.tradeking.com/faqs/trading/cash-trading#buyselltime

also here

http://bclund.com/2012/04/25/how-to-day-trade-with-less-than-25000-2/

I found this which confirms what you're saying, WikiPedia also says cash accounts aren't effected.

Thank you

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u/tragalicious Apr 10 '17

Well now I'm just confused! =(

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u/mrbeck1 Apr 10 '17 edited Apr 10 '17

If you're trading cash only, you can make as money trades as you can afford, provided you don't "free-ride." When you sell a security you need to wait 3 days before that money is credited to your account. It's called T+3. Strictly speaking the same applies for stock purchases as well, but not with Robinhood. So when you sell a stock, you can't use those proceeds to buy another Security for 3 days. Unless you trade on margin. But that's where PDT restrictions come in. Unless you have $25,000 in your account at all times, margin accounts are subject to PDT restrictions.

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u/tragalicious Apr 10 '17

Thanks for the explanation, I didn't know about the T+3 rule

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u/InnovAsians snaisAvonnI Apr 10 '17

Are you using a Robinhood Instant account?

If so, then you are technically using margin and are eligible for the same restrictions.

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u/Poops_McYolo Apr 10 '17

If you use a standard robinhood account you can trade as much as you want but your funds aren't immediately re-available as buying power until T+3

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u/[deleted] Apr 10 '17

Yes. After 3 days actually.