Ever since it was introduced back in 2001, traders have been aware of this restriction. The pattern day trader rule states that any trader with a trading account under $25K can only make three-day trades in a rolling five day period. Once their account reaches over $25K the rule no longer applies to them. This restriction often throws beginners off a little bit, but it's there to protect those who don't have a lot of experience. The PDT rule stops traders from going overboard. The rule can also teach traders some good habits for example only sticking to A+ setups. These habits will prevent them from making mistakes during trades and investments.

You'll definitely know about the rule, because your broker will let you know about it but if you choose to not listen and break the rule then your brokerage account will be frozen for 90 days. You can also get a notification from your brokerage firm and you might get a margin call. If this happens, you'll have 5 business days to add more money to your account in order to reach $25K.

There are many ways to get around the pattern day trader rule and using a cash account is one of them. The PDT rule doesn't apply to those with a cash account, even if they have less than $25K. There is one issue with cash accounts and that's why margin accounts are more popular. The thing is, you can only trade with settled cash. This basically means that when you convert assets, you aren't aloud to use that cash for 2 days after the transaction date. This rule from the SEC's cash settlement rules makes trading hard for those with small accounts or very active traders. Cash accounts are great for inexperienced traders that want to try trading out without having to deal with the PDT rule.

Opening an account with an offshore broker is a common way to get away from various rules and regulations, including the pattern day trader rule. If you're going to use an offshore broker, we suggest CMEG and TradeZero, but there are a few things that you should know before trying out any broker that isn't based in the United States. First of all, there are a few risks about using offshore brokers so you should pay very close attention to all the paperwork that they will make you sign. Check the rules and regulations and do some good research. Also, keep this in mind; some of the restrictions that you get to avoid with offshore brokers are there for your own good. Be careful and be sure that you aren't risking your safety.

In addition to the usual fees most brokers offer, the common offshore brokers also have commission fees and subscription fees that you'll have to pay. Consider whether all the risks and additional fees are worth it. They might be if you really want to get away from the PDT rule, but you'll have some other things to worry about. It all comes down to what you think is right for you and what suits your strategy best.

If you don't think opening a cash account or trying out an offshore broker is right for you, don't worry. There are still strategies that can help you that we will talk about right now.

Even if a future trader's account has less than $25K, they can still trade as much as they would like. A future's contract is a contract for assets bought at an agreed price, however they are delivered and paid for later, at a predetermined date. The assets are usually shares or commodities. In most cases, this contract settles on the day of its expiration. When this happens, the futures holder has to buy or sell the asset at the predetermined price that has been agreed upon.

Trading options and futures allows many traders to get into the markets and become active traders which they couldn't have done if they just opened a regular margin account. Trading futures and options has pros and cons but it is definitely something that you should look into and consider trying out if it seems like the right trading for you. These two kinds of trading are different but also bring a lot of the same benefits for beginner traders and also the more experienced ones.