Intraday Margin Rule for Non-Leverage Margin Accounts

Q: What is the Intraday Margin Rule?

The Intraday Margin Rule is a regulatory update from FINRA designed to replace the legacy Pattern Day Trader (PDT) framework. While the old rules focused on the frequency of trades, the new rule focuses on real-time risk exposure. It measures the financial risk of positions held during the day that are closed before the market settles.

Q: Is the Pattern Day Trader (PDT) rule still in effect?

No. The "pattern day trader" designation has been abolished. Brokers are no longer required to monitor or flag accounts that execute four or more day trades within a five-business-day window.

Q: Does the new rule limit the number of trades I can make?

No. The previous "4-trade limit" has been eliminated. You may enter and exit positions as frequently as you choose, provided your account has sufficient equity to cover the intraday risk requirements set by your broker.

Q: Is the $25,000 minimum equity requirement still required?

No. The specific $25,000 minimum previously required to maintain "Pattern Day Trader" status has been removed. However, individual firms may still maintain their own "house" requirements for risk management.

Q: I only trade with my own cash. Why does this matter to me?

Even without using leverage, accounts enabled for margin trading are often utilized to avoid the delays associated with T+1 settlement. The new rule allows you to benefit from the speed of a margin account without being constrained by the intricate calculation rules or trading limitations that characterized the former Pattern Day Trader (PDT) system. Consequently, PDT restrictions are no longer necessary, and clients will no longer encounter trade rejections stemming from PDT protection and restrictions.

Key Advantages

• Capital Efficiency: Traders can pivot strategies or re-enter positions instantly without worrying about "locking" their account for the week due to trade frequency.
• Elimination of "Day Trading Calls": Since the PDT status is gone, traders are no longer at risk of account freezes or "equity maintenance calls" triggered simply by the number of trades made.
• Focus on Strategy, Not Math: You can focus entirely on market movement rather than keeping a manual tally of "round-trip" trades to avoid a 90-day account restriction.

Margin trading involves significant risk and is not suitable for all investors. Before considering a margin loan, it is crucial that you carefully consider how borrowing fits with your investment objectives and risk tolerance.

When trading on margin, you assume higher market risk, and potential losses can exceed the collateral value in your account. Alpaca may sell any securities in your account, without prior notice, to satisfy a margin call. Alpaca may also change its “house” maintenance margin requirements at any time without advance written notice. You are not entitled to an extension of time on a margin call. Please review the Firm’s Margin Disclosure Statement before investing.