Pattern Day Trader (PDT) Rule

A FINRA regulation that requires any margin account executing four or more day trades within five business days to maintain a minimum equity balance of $25,000. The rule was adopted in 2001 after the dot-com bust, ostensibly to protect inexperienced traders from excessive risk. It remains one of the most controversial regulations in retail trading, and many traders work around it by using cash accounts, multiple brokerages, or trading futures and forex, which are exempt from PDT rules.