Robinhood is one of the best commission-free trading platforms out there and this reputation is proven by the figures representing its number of users. However, Robinhood has other competitors like TD Ameritrade, Fidelity, Webull. Day trading is one important activity carried out by all traders. You can day trade on Robinhood but how many day trades can you make on Robinhood? That's what we are going to be seeing today.
One of the most efficient and interesting aspects of investing is day trading. Professional traders use a variety of platforms to carry out this task.
Robinhood is the most popular day trading platform among the several options available. A trader is classified as a day trader if they trade more than four times in a five-day period during the week.
As a day trader, you must understand the day trading rule so as to avoid any day trader status placed, on your account. However, even if you have been limited, you can always remove pattern day trader status on your Robinhood account.
To prevent your account from being placed under this status, you'll need to follow the rule and know how many day trades you can make on Robinhood and that is exactly what we are going to be seeing in this article.
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What is the Day Trader Rule?
If you execute four or more day trades in five trading days, you'll be considered a pattern day trader, as long as the number of day trades represents more than 6% of your total trades in your margin brokerage account for the same five trading days.
Unless you have at least $25,000 in portfolio value (minus any cryptocurrency positions) in your Instant or Gold brokerage account at the end of the previous day, you're generally limited to no more than three day trades in a five-day period.
This may sound complicated, but it simply means that after your fourth day trade in any five-day period, you'll be flagged as a pattern day trader, and you'll need a portfolio value (excluding any cryptocurrency positions) of more than $25,000 at the end of the trading day to be able to day trade the next day.
Your portfolio value is the sum of your cash, stocks, and options, excluding cryptocurrency investments for pattern day trading calculations.
Your portfolio value may rise above $25,000 at any time throughout the trading day, but we only consider the previous trading day's closing amount.
Keep in mind that this figure excludes any cryptocurrency holdings and only includes the cash, options, and stocks in your brokerage account. You may check whether you're banned from day trading on any particular day by going to your app's Account — Day Trades section. Keep in mind that this figure excludes your Gold Buying Power and cryptocurrency–only the cash, options, and stocks in your brokerage account are included.
Furthermore, the 5-day trading window does not always correspond to the calendar week. For example, a five-day trade period could be Wednesday through Tuesday. Your brokerage account will be tagged for pattern day trading for 90 calendar days if you place your fourth day trade in the 5-day window.
This implies that you won't be able to make any day trades for 90 days unless you increase the value of your portfolio (excluding any cryptocurrency investments) to more than $25,000.
If you day trade while marked as a pattern day trader and conclude the previous trading day with less than $25,000 in equity, you'll receive a day trade violation and be barred from purchasing (stocks or options with Robinhood Financial, and cryptocurrencies with Robinhood Crypto) for 90 days.
If you end the trading day with more than $25,000 in equity, this restriction will be lifted. Even if your portfolio is worth more than $25,000, frequent and/or repeated day trading breaches may result in your brokerage account being restricted to position closing only.
CHECK ALSO: How to Exercise a Call Option on Robinhood
What is Considered a Day Trade on Robinhood?
A day trade is when you buy and sell the same stock or open and close the same options contract(s) inside a single trading day.
Day Trading Implementations on Robinhood
- Cash brokerage accounts are exempt from pattern day trading limits; only Instant and Gold accounts are affected.
- During regular and extended trading hours, a Robinhood Cash brokerage account allows you to make commission-free trades. You won't be able to make Instant Deposits or Settlements. You can downgrade from an Instant or Gold account to a Cash account at any time.
CHECK ALSO: How to Sell a Call Option on Robinhood
Can You Day Trade on Robinhood?
Yes, you can use Robinhood to day trade. If you're a day trader and want to know if you can use Robinhood, your favorite trading app, for day trading, the answer is yes. Robinhood allows you to day trade for three days and then trade based on your portfolio for another day.
On Robinhood, there are several guidelines to follow if you want to day trade. The current worth of about $25,000 in your Robinhood account is included in these regulations.
CHECK ALSO: How to Transfer Crypto from Robinhood to Crypto.com
Is Robinhood Good for Day Trading?
Yes, Robinhood is excellent for day trading. Robinhood has a spectacular place in the top applications for trading by all types of investors, with over 22 million account holders.
However, as per the professionals of the market, Robinhood is best fit for marginal traders, day traders, and knowledgeable investors.
Although there are specific regulations for day trading on Robinhood, its user-friendly program and layout entice day traders.
Not only skilled day traders, but even novice day traders, can benefit from Robinhood's day trading services.
It lets you to start day trading without incurring any additional costs. If you want to improve your day trading game, though, you should move to cash accounts.
With their simple applications and rules, Robinhood makes it easy for newcomers to adjust to the new world of day trading.
If you're still unsure whether Robinhood is suitable for day trading, you can start with the app's basic trading options. You can expand your traders whenever you want once you've gained confidence in the software and platform.
CHECK ALSO: How to Transfer Crypto from Robinhood to Coinbase
How Many Dat Trades Can You Make on Robinhood?
When you decide to start day trading or switch to Robinhood as your day trading platform, the obvious question of how many day trades you can do on Robinhood arises.
The short answer is that you can only make three trades in a five-day period on Robinhood. If you have a larger portfolio, though, the situation is different.
Only if you have 25,000 dollars in your portfolio or the equal worth of assets in your possession does Robinhood allow you to make the fourth trade on consecutive days.
This valuation takes into account both the cash worth and the stocks in your account.
CHECK ALSO: How to Transfer Stocks from Robinhood to TD Ameritrade
How to Get Unlimited Day Trades on Robinhood
There's always the possibility of an extra day of day trading via Robinhood for day traders. And when Robinhood limits day traders to three deals in five days, they figure out how to get limitless day traders on the platform.
The kind of account that day traders use for day trading must be taken into consideration. The restrictions apply only to the two types of Robinhood accounts: immediate and gold, often known as marginal accounts.
You can avoid these restrictions if you have a cash account and utilize it for day trading. To use your cash account for day trading, you only need $25,000 in assets, including cash and stocks. The market and stocks, on the other hand, will take at least two days to settle.
You can day trade from your cash account if you want to make more than three trades in five days. It is, however, preferable to employ marginal accounts and set aside assets.
CHECK ALSO: How to Transfer Stocks from Robinhood to Fidelity
Why Can't I Day Trade on Robinhood
The day trading feature of Robinhood allows all types of traders to participate in day trades. If you're unable to do so, it's likely that you neglected a few details while day trading earlier.
The first thing to remember is that if you have a gold or minimal account with Robinhood, you can only day trade for three days in a day cycle.
This cycle may also be out of sync with the actual or common week cycle. For example, your day trading week could begin on Tuesday and last up to five days. It might or might not correspond to the weekly Monday-Friday cycle.
However, putting a fourth-day trade on Robinhood with your marginal account cancels your trades for another 90-day period. Don't worry, once the 90-day pattern is over, you can begin day trading as usual.
CHECK ALSO: How to Transfer Stocks from Robinhood to Webull
Can You Get Banned for Day Trading on Robinhood?
This depends on many factors. Robinhood does not penalize their loyal customers. They can, however, put a stop to your day trading operations for a set length of time.
This occurs when you make a fourth-day deal with any account other than your cash account. You will not be able to do the fourth trade if your account does not have a value or accumulate equity of $25,000.
If you were previously unaware of this and failed to follow the Robinhood app's regulations, you may be restricted. This is not, however, a permanent or literal prohibition. It's simply a 90-day cycle restriction starting with the fourth-day trade.
Your prohibition will be lifted once your 90-day cycle is completed, and you can begin day trading as usual. To avoid such scenarios, it is recommended that you read the Robinhood app's set of guidelines.
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What Happens if You Make Too Many Day Trades on Robinhood?
It depends. It is entirely dependent on the type of account you use for day trading on Robinhood. You can make as many day trades as you like with your cash account if you're using it. The cash account of Robinhood consumers has no restrictions or constraints.
Even if you're day trading with a total equity of $25,000 on your gold or instant account, you're safe and there are no "too many" day trades.
Even on the fourth day of the five-day day trading window, you can make day transactions. If this is not the case, the Robinhood app can impose a temporary ban on all day trading.
It will, however, be lifted 90 days following your account's last day of trading. After that, you have a maximum of three day trades each five-day cycle.
CHECK ALSO: How to Transfer Buying Power from Robinhood to Bank
Can You Buy and Sell the Same Stock Repeatedly on Robinhood?
Yes, on Robinhood, you can buy and sell the same stock multiple times on the same day. When you purchase a stock and notice a price increase on the same day that you want to sell it. This status, however, may alter depending on market conditions.
A day trade is defined as when you buy and sell a stock on the same day. According to the Robinhood rules, you can only do this three times in five days.
Swing trades, on the other hand, are when you buy a stock and sell it the next or next day.
You may perform a swing trade as many times as you like once you have the hang of it. However, if you want to conduct this as a day trade, you must have at least $25,000 in your account.
CHECK ALSO: How to Add Money to Robinhood to Without Bank
What Are the Day Trading Rules Over 25K?
The day trading rules over 25k are clear. Day traders can day trade as many times as they want as long as they have a combined equity of at least $25,000. This includes both cash and stocks.
Such accounts with a balance of more than $25,000 are not subject to any restrictions. Account holders must remember that equity only refers to the amount of money in their account and the stocks they own.
CHECK ALSO: How to Transfer Money from Robinhood to Bank
Can You Day Trade Crypto on Robinhood?
This is one of the most concerning topics for all traders. Yes, you may use the Robinhood app to day trade cryptocurrency.
This platform makes it simple to day and swing trade cryptocurrency. Trading cryptocurrency on Robinhood is similar to trading equities and exchange-traded funds (ETFs).
However, it's easy to believe that Robinhood is solely for stock trading. However, with over tens of thousands of satisfied users, Robinhood has shown to be an equally effective platform for crypto trading.
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Final Thoughts on How Many Day Trades Can You Make On Robinhood
Day trading is a very profitable and efficient trading strategy. It is appropriate for astute investors. Using Robinhood simplifies and streamlines your day trading experience.
You need to stay away from the pattern day trader status by following the Robinhood rules and regulations.
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