The pattern day trader rule and its $25,000 minimum ended on June 4, 2026, but US day traders still face several rules. Brokers enforce intraday margin in margin accounts, with a $2,000 minimum. Cash accounts can only trade with settled funds (T+1), or they risk good faith and free-riding violations. Short sales follow the locate and uptick (Rule 201) rules. The wash sale rule affects taxes, and profits are taxed as short-term capital gains unless you qualify for trader tax status.
The end of the $25,000 rule made headlines, but it didn't make day trading rule-free. If anything, knowing the remaining rules matters more now, because nothing forces you to slow down. Here's every rule that still shapes US day trading in 2026.
1. The PDT rule is gone. Intraday margin replaced it
FINRA eliminated the pattern day trader designation and the $25,000 requirement effective June 4, 2026, with brokers phasing in the change through October 20, 2027. Brokers must now prevent (or catch at end of day) intraday margin deficits in all margin accounts. Your intraday buying power depends on your real-time margin excess. Details: the PDT rule is gone.
Your broker may still be mid-transition, and can apply stricter house rules.
2. Margin account basics
- $2,000 minimum equity to open and maintain a margin account.
- Regulation T: 50% initial margin for overnight stock positions.
- Maintenance margin: at least 25% under FINRA rules, and often higher at brokers, especially for volatile stocks.
- Margin calls must be met promptly, or positions get liquidated.
Score the Setup Before You Take It
TRADZY's Void Engine rates any setup 0–100 across 12+ variables: structure, trend alignment, volume, momentum and key levels.
Score a Setup Free →3. Cash account rules
Cash accounts have no day trade limits, but they have settlement rules. US stocks settle T+1.
| Violation | What happens | Penalty |
|---|---|---|
| Good faith violation (GFV) | Buying with unsettled funds and selling before those funds settle | Several GFVs in 12 months can restrict the account to settled-cash-only trading for 90 days |
| Free riding | Buying and selling without paying for the purchase with settled funds | Account restricted for 90 days |
| Cash liquidation violation | Paying for purchases by selling other positions after the buy | Similar restrictions |
With T+1, money from a sale today is available tomorrow.
4. Short selling rules
- Locate requirement: your broker must be able to borrow the shares before you short.
- Rule 201 (alternative uptick rule): after a stock falls 10% from the prior close, shorts can only execute above the current best bid for the rest of that day and the next.
- Margin account required.
- Details in how to short a stock.
5. Trading halts and circuit breakers
- LULD (Limit Up–Limit Down) pauses individual stocks that move too fast.
- News halts pause stocks pending material announcements.
- Market-wide circuit breakers halt all trading at 7%, 13% and 20% S&P 500 declines. See stock market crash: how traders should respond.
6. Options-specific rules
- Brokers assign options approval levels, which limit which strategies you can trade.
- Spreads and naked positions have their own margin requirements.
- Early assignment can create positions you didn't plan for, especially around dividends.
7. Tax rules
- Short-term capital gains: day trading profits are taxed as ordinary income rates.
- Wash sale rule: a loss is disallowed if you buy a substantially identical security within 30 days before or after the sale. Active traders trigger this constantly. See the wash sale rule explained.
- Trader tax status (TTS) and the Section 475 mark-to-market election can change how losses and expenses are treated, but have strict requirements.
- Futures are Section 1256 contracts: 60% long-term and 40% short-term treatment.
- Day trading in an IRA has its own limits: day trading 401(k) and IRA rules.
Get professional tax advice for your situation.
8. Markets that never had PDT rules
- Futures: margin set by exchange and broker. See what is futures trading.
- Spot forex: NFA rules, 50:1 leverage cap on majors, FIFO and no hedging in the same account.
- Crypto: exchange rules; taxed as property in the US.
Rules you should set yourself
With the PDT guardrail gone, personal rules do its job:
- Maximum trades per day.
- Daily loss limit (for example 2–3× normal per-trade risk).
- Risk per trade (for example 0.5–1% of the account).
- No trading in the first minutes of the open without a plan, or midday chop if it's where you lose.
TRADZY tracks trades per day, daily P&L against your limit, and rule breaks, so the limits you set actually get enforced.
FAQ
Is the $25,000 day trading rule still in effect?
No. FINRA's pattern day trader rule and $25,000 minimum were eliminated effective June 4, 2026, with brokers phasing in the change through October 20, 2027.
How many day trades can I make in a cash account?
There's no limit on the number, but you can only trade with settled funds. Trading with unsettled proceeds causes good faith or free-riding violations.
What is a good faith violation?
Buying a security with unsettled funds and selling it before those funds settle. Repeated violations lead to a 90-day restriction to settled-cash-only trading.
Do day traders pay more tax?
Day trading profits are short-term capital gains, taxed at ordinary income rates, which are usually higher than long-term rates. Wash sale rules can also defer losses.
Do the day trading rules apply to futures and forex?
The old PDT rule never applied to futures or forex. They have their own margin rules, and futures have favourable 60/40 tax treatment in the US.
Put This Into Practice
- Score your next setup 0–100 with the Void Engine before entering
- Log the trade and tag the setup in the TradLog
- Review weekly: keep what pays, cut what doesn't
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Educational content, not financial advice. Trading involves substantial risk of loss.