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Key Takeaways Lower capital requirements will open day trading to a much broader audience.
Increased participation could boost liquidity and volatility, especially in lower-priced stocks.
Education and simulation remain critical before risking real capital in fast-moving markets.
The world of day trading changes minute by minute but then again, some aspects of day trading have stayed the same for decades.
The big news: In case you missed it, day traders soon will be able to trade with as little as $2,000 in a U.S. account, down from $25,000. Now for some background:
The existing rule was called the “Pattern Day Trader Rule” or “PDT Rule”, and it was old. How old? It came out six years before the first iPhone was available. In those days, we accessed the internet using those weird-sounding dial-up modems. Old.
A “round trip” is when you buy and sell the same stock on the same day. The PDT Rule had lots of details, but the bottom line was you had a choice: You could only make three or fewer round-trip flights in five business days. If you had four or more, you were considered a day trader, subject to the PDT Rule. Among other requirements, that meant you needed to maintain $25,000 in your account at all times.
I remember sweating bullets when I started out and got near that $25,000 level because it was a lot of money. If I dropped below it, my trading was restricted.
For decades, the only way to day trade without these restrictions was to open a non-U.S. account. Those accounts are fine, but everything being equal, I’d prefer to have all the protections of U.S.-based brokerage accounts.
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