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How to Request a Pattern Day Trader (PDT) Reset on Your Account?

This article compiles a step by step process to request a pattern day trader (PDT) reset on your brokerage account.
how to request a pattern day reset

If you are a trader who loves taking risk, you must have surely experience the Pattern Day Trader restriction. As a result a pattern day trader (PDT) reset may be a great option to get back on the optimal trading tracks. When a pattern day trader is applied to your account, you will have certain restriction set to your account.

This PDT rule was put in place to help excessive traders control their rate of risky trades.

If you are a frequent trader on well-known platforms such as Robinhood or TD Ameritrade, you must have heard of such terms.

Users can remove pattern day trade on their Robinhood or TD Ameritrade account by simply requesting a reset if the feature is available for their account.

Stock options and short sells are examples of securities that pattern day traders may trade. In terms of this categorization, any form of exchange shall be considered as long as it occurs on the same day.

If a margin call is made, the pattern day trader has five business days to respond. Until the call is met, their trading will be restricted to two times the maintenance margin. If this issue is not resolved within five business days, the account will be placed on a 90-day cash restricted account status, or until the issues are remedied.

Long and short positions held overnight but sold before new purchases of the same security the next day are not counted.

How Can I Reset a Pattern Day Trade? To reset a pattern day trade, you need to check if your account is eligible for a reset and if in case it it, request a reset which shall be done within 3 to 5 business days.

Below, I have shown how you can request a pattern day trader reset on your brokerage's trading account.

CHECK ALSO: How to Transfer Stocks from Robinhood to Fidelity [Complete Process]

What is a Pattern Day Trader (PDT)?

A pattern day trader (PDT) is a regulatory designation for traders or investors that use a margin account to conduct four or more day transactions within a five-day period. During that five-day period, the number of day trades must account for more than 6% of the entire trade activity on the margin account.

If this happens, the trader's broker will mark their account as a PDT. The PDT designation imposes certain limits on subsequent trading, with the goal of discouraging investors from engaging in excessive trading.

CHECK ALSO: How to Transfer Stocks from Robinhood to TD Ameritrade [Complete Process]

Why Does The Pattern Day Trader Rule Exist?

The Pattern Day Trading rule was put in place in 2001 as a precautionary measure to help limit the risk of day trading.

The main aim of this rule is to discourage investors from engaging into excessive trading.

How to Request a Pattern Day Trader (PDT) Reset on Your Account

To request a Pattern Day Trading (PDT) reset, you have a few possibilities. You can deposit money into the account to make it worth more than USD 25,000. Day trades are permitted on accounts worth more than USD 25,000. Brokerage firms can also remove the PDT flag from a client's account once every 180 days, according to FINRA.

We have the power to erase an account's flag if it was incorrectly flagged and the customer's aim is not to day trade in his or her account. The client will be allowed three day transactions every five business days once the PDT flag is removed.

CHECK ALSO: How to Transfer Buying Power from Robinhood to Bank [Complete Process]

Here is a Step by Step Guide to Request a Pattern Day Trader (PDT) Reset on Your Account

  1. Login to your brokerage account and go to the "Account Management" tab.
  2. Navigate to Support >> Message Center.
  3. Now click on "Compose" then select "Pattern Day Trader Request".
  4. The PDT tool will launch and from there, select "Check Status" and the tool will check your account to see if it is eligible for a PDT reset.
  5. A window will appear indicating that the account is eligible for a PDT reset if it is eligible. The window will display the last five business days' worth of four day transactions, as well as the Pattern Day Trading Reset Request Acknowledgement. Click the green "Send Reset Request" button after checking the box that says "I have read and consent to the acknowledgment." A confirmation window will appear, and you should click "Yes" to submit your PDT Reset Request officially.

Important!
Requests for PDT Reset are subject to review for approval. This review typically takes between 1-3 business days to complete.

CHECK ALSO: How to Exercise a Call Option [Complete Process]

Final Thoughts on How to Request a PDT (Pattern Day Trader) Reset on Your Brokerage Account

PDT is a rule that has been implemented to help control traders who trade excessively. When this rule is applied to your account, you will have certain trading limitations. At times it can be nerving but it is an important stage to consider for every trader. When you are under this rule, you will better know how to trade effectively.

However, if you are eligible for a PDT reset, you can request for a reset using the steps outlined above. The process might take 3 to 5 business days to complete.

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About the Author

Tebid Kelly is a Graphic Designer, Web Developer, Ethical Hacker, Programmer, and Content Creator who showcases his skills and experience on his blogs. He also has much love for finance apps such as Cash App, Venmo, PayPal, Zelle, etc on which he ha…

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