Vanguard 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 Vanguard allow on a cash account?

Vanguard Day Trading

Do you want to day trade at Vanguard? Do you have $25,000 to deposit in your account? If you answered yes to the first question and no to the second, don't worry. You can still day trade as long as you follow our guidelines. Keep reading.

Vanguard Day Trading Rules

The pattern day trading rule in the United States comes from the Financial Industry Regulatory Authority (FINRA). FINRA creates the rule, and its member firms, including Vanguard, must enforce it. If you have a brokerage account at Vanguard, you’ll need to comply with this rule.

So, what does the rule specify? Any account identified as a pattern day trader must maintain account equity of at least $25,000.

And what qualifies as pattern day trading? Here's the definition:

An account with margin privileges that executes 4 or more day trades of stocks, options, ETFs, or other securities within 5 business days, with those trades comprising more than 6% of the account’s total trading activity.

It’s important to understand the specifics of this rule. If your account doesn’t match any part of this definition, you’re not subject to the $25k requirement.


Strategies to Elude the PDT Rule

To explore ways to legally circumvent the PDT rule, let’s dissect the definition of a PDT account:

“...with margin privileges...”

Only margin accounts are classified as PDT accounts. If you trade in a cash account, you don't need to maintain a $25,000 balance. However, be aware that trading in a cash account might limit day-trading activities since you cannot trade with unsettled funds, which take two business days to clear after stock trades.

“...4 or more day trades...”

You can avoid being classified as a PDT by making no more than three day trades per week. With this level of activity, securities regulators do not apply the PDT safeguards.


can you day trade on vanguard


“...making up over 6%...”

This part of the rule is tougher to manage, but it might still be relevant for some traders. If your day trades are less than 6% of your total trading activity, you're not covered by the PDT rule. You’d need a high volume of non-day trades to keep your day trading below this threshold.

Alternative For Traders

For day traders, a much better brokerage firm is Webull. It offers many advantages over Vanguard, including commission-free options trades, lower margin rates, paper trading, an excellent mobile app, and professional-level trading tools.


Webull Promotion


Open Webull Account

Updated on 8/6/2024.

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