6 percent day trade rule

General Trading information on PDT specifies that you are considered a pattern day trader if “your day trading activities are greater than 6 percent of your total trading activity for that same 5 day period”. From my calculation I am well below 6 percent in my day trade count relative to the total trading activity, but still getting PDT error.

Couple of questions is

  1. Does Alpaca take 6 percent into calculation for PDT protection?

  2. If so, is there a simple way to see whether I am below 6 percent or not? I see the count in Account → Balances page, but I don’t see the total number of trades within the same period.

Thanks for any pointer on this.

@MutualVirtue Good question. Alpaca does not include the 6% calculation in PDT protections. If one gets inadvertently flagged for PDT, and it can be shown the day trades were less than 6% of the total trades during that time, then the PDT designation can be manually removed. Generally assume however that Alpaca uses a bit broader interpretation of a Pattern Day Trader which doesn’t take into account the 6% factor. Per SEC

Customers should note that this rule is a minimum requirement, and that some broker-dealers use a slightly broader definition in determining whether a customer qualifies as a “pattern day trader.”

Thanks for the confirmation

Hi Dan,

What is the process of manually removing PDT designation? I plan to do some significant amount of trading and I am pretty sure I will be flagged for PDT even though day trading count would be well below 6% of the total trades. If the process is something manageable, I would strategize around it. But, if not, it is looking difficult to even test out the strategy.

@MutualVirtue Could you submit a support request to support@alpaca.markets? Mention my name. This would need to be a one-off and not sure if it can be accommodated. Something to consider is the total trades is by dollar amount and not quantity and may be a little complex to track on your side to ensure you do not exceed the 6%.

Thanks Dan. I am not blocked, just looking to firm up a long term strategy. Thanks for the added information. That makes it a little clearer. Much appreciate it.