Day trading refers to buying and selling the same stock within a single day. On U.S. stock markets, these trades are subject to specific regulations. In particular, individual investors who frequently engage in day trades may be classified as “Pattern Day Traders.”

According to this rule:

If you perform 3 day trades within 5 business days, you will be permanently classified as a “Pattern Day Trader.”

For example:

• Thursday: You bought Apple stock and sold it the same day: 1 AAPL day trade
• Friday: You bought Tesla stock, then sold both Tesla and Apple shares on the same day: 1 TSLA day trade
• Monday: Your order to buy Spotify, placed on Saturday, was executed. Then you sold part or all of your Spotify shares the same day: 1 SPOT day trade
  
  -> In this case, you would be classified as a “Pattern Day Trader.”

What happens if I'm classified as a Pattern Day Trader?

If you're classified as such, your next same-day trade will result in a restriction, and you cannot make day trades anymore. However, if your account holds stocks worth $25.000 or more, you can continue to make day trades without this restriction as long as you maintain that value.