Definition

A pattern day trader is defined in Exchange Rule 431 (Margin Requirement) as any customer who executes 4 or more round-trip day trades within any 5 successive business days.^[4] If, however, the number of day-trades is less than or equal to 6% of the total number of trades that trader has made for that five business day period, the trader will not be considered a pattern day trader and they will not be required to meet the criteria for a pattern day trader.^[5]

A non-pattern day trader (ie someone with only occasional day trading), can become designated a pattern day trader anytime if they meet the above criteria.

If the brokerage knows, or reasonably believes a client who seeks to open or resume an account will engage in pattern day trading, then the customer must immediately be considered a pattern day trader without waiting 5 business days.

Source: Information Memo of Amendments to Rule 431 ("Margin Requirements") Regarding "Day Trading".