These restrictions came into effect after the dot com bubble collapsed (2001). Before the collapse of the dot com bubble, most traders considered themselves day traders. Unfortunately, staying long in the markets resulted in margin calls.
Therefore, FINRA and SEC enacted these 90 day restriction Robinhood, with their main goal being to protect the traders. So in this article, we’ll focus on how to overcome the 90 day buy restriction Robinhood.
Understanding Robinhood Day Trade Restriction: What You Need to Know
Generally, the 90 day trade restriction Robinhood is usually set at the start of your trading day. The day trading restrictions Robinhood is based on:
- The maintenance restriction for holding your stocks overnight.
- The capital in your trading account.
This means that you can have a higher limit if you hold stocks with lower maintenance needs or more cash than your stocks. Remember, you can only increase your Robinhood 90 day buy restriction by increasing your trading cash and not selling your stocks.
To protect the traders, Robinhood has a unique way to check your daily limit in their app.
Managing Day Trading Restrictions Effectively
Are there restrictions on day trading? Well, the answer is yes. These restrictions are there to prevent us from over-leveraging our accounts. It helps traders maintain a certain amount of cash to avoid being banned for up to 90 days.
Therefore, traders will have to keep their equity at $25,000. You can also use the Day Trade Counter offered by Robinhood to monitor your trades and prevent them from exceeding the limit.
Exploring the 90 Day Buy Restriction on Robinhood: Implications and Alternatives
Traders only get day trade calls when they are flagged as pattern day traders in the last 90 days. You can also get a day trade call after exceeding your usual day trade limit. Generally, any trader who executes over 4-day trades in 5 days, representing over 6% of their trades, is a PDT (pattern day trader).
Breaking these PDT rules results in a trader being given five days to resolve the day trade call. Or you will get a 90 day trade restriction on Robinhood, especially if you’re using a Gold or Instant account.
Alternatively, you can try to work with no day trading restrictions brokers. If you prefer trading using Robinhood’s platform, then you should go for a cash account. A cash account doesn’t follow these restrictions.
After all, cash accounts don’t allow margin trades. Some experts propose opening several trading accounts. With more accounts, you can continue trading.
Unleashing Your Trading Potential: Strategies for Thriving Amidst Day Trade Restriction
Generally, day trading can be profitable when done correctly, but its restrictions can make it hard for most traders. Therefore, you can unleash your trading potential by using the no day trading restrictions broker, particularly offshore brokers. After all, offshore brokers don’t have PDT restrictions.
Unfortunately, they don’t offer the necessary protection offered by American-based brokers. Another option to thrive as a trader is going for futures and Forex instead of stocks. These financial assets don’t follow the PDT rules.
But if you prefer trading stocks, then you’ll need a cash account; after all, you can make lots of trades using a smaller amount of cash. While a trader can make unlimited trades, these accounts have a huge downside. According to the SEC, all cash profits have to settle before you can finally receive your cash.
Therefore, you’ll have to wait for up to 2 days after the day you settle the trade to receive your cash.
Day Trading Restriction: Common Questions
How many can day traders make in a week? With the PDT restrictions, traders can only make a maximum of 3 trades in 5 trading days.
How can I resolve the day trading restriction call? Generally, the broker will ask you to make the necessary deposit within five days. Without making a deposit, the broker will ban your account for 90 days.