Merrill Edge pattern day trading rules and active trader requirements. Margin buying power limits, and $25,000 minimum equity balance PDT restrictions. How many day trades does Merrill Edge allow on cash account.

Merrill Edge Pattern Day Trading

If you want to day trade at Merrill Edge but don’t have $25,000 to deposit, no worries. There are ways around this policy, and we’re going to detail them for you.

Because of the Financial Industry Regulatory Authority, or more specifically the rules FINRA imposes on broker-dealers in the United States, if you plan to day trade regularly with an American-based account, you’ll need to have at least $25,000 in assets in your account. If you fail to meet this requirement, you could see your account blocked for up to 90 days.

How Many Day Trades Does Merrill Edge Allow

The rule applies to any account that qualifies as a pattern-day trading (PDT) account. A PDT account has three characteristics:
a. Margin account
b. Places 4 or more equity day trades in a period of 5 business days
c. Day trades make up at least 6% of total trading activity

Any account that does not meet all three characteristics is not a PDT account. Thus, it’s not too difficult to dodge the rule.

Here are some suggestions:

How to Evade the Pattern-Day-Trading Requirement

Notice that the first characteristic of a PDT account is the use of margin. A cash account automatically avoids the $25,000 requirement. If you want to day trade, you could open a cash account instead of a margin account.

If you go with a cash account, remember that you won’t be able to trade with unsettled funds, and this will slow down the trading experience somewhat.

Another idea is to place 3 or fewer day trades per week. At this level of trading, the securities regulators don’t consider an account to be a pattern-day trading account. So you won’t have to deposit $25,000.

And speaking of $25,000, the equity doesn’t have to be actual cash sitting in your account. You could have $25,000 in low-risk mutual funds, for example. The rule requires $25,000 of account equity, which can be in any number of investments.

Also notice in point (b) that we said, “equity day trades.” The PDT regulation only applies to the day trading of stocks. You can day trade options all you want and not have to worry about the $25,000 requirement.

Merrill Edge offers options trading. In fact, the broker has many advanced option tools with a 65¢ per-contract commission. Some option strategies require just a cash account, while others require a margin account. You can day trade options in either account type.

To add options trading to a Merrill Edge account, you’ll need to click on ‘Trade’ in the top menu and select ‘Options.’

Merrill Edge No Longer Imposes Restrictions on Its Desktop Platform

Day trading now looks even more enticing at Merrill Edge as the broker has removed long-standing account requirements to gain access to its desktop software MarketPro. The broker offers several tools day traders will want, such as Level II quotes and right-click trading from a chart.


Merrill Edge Day Trading

Alternative For Traders

For active traders a good alternative broker is Webull. It has a number of advantages over Merrill Edge: $0 commissions on options trades, lower margin rates, virtual trading, and easier to learn trading tools.


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Open WeBull Account

Webull


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