How Many Day Trades Can You Make on Robinhood?
Robinhood allows users to place commission-free trades and access plenty of trading features directly from their platform.
One of these alternatives is the day trading feature, which allows day traders to perform multiple operations within the same trading day.
Nevertheless, performing a day trade call isn’t the same thing as simply trading stocks on your Robinhood account - there are rules that must be followed.
Thus, if you are wondering whether you can make further day trades in a single trading day or not, then this post is for you.
Read more to learn everything about:
- How many day trades can you make on Robinhood?;
- Understanding day trades on Robinhood;
- What to know about rules and limitations for day trades on the Robinhood platform.
What is a “Day Trade” in Robinhood?
If you buy a stock, let’s say, on Monday, and you sell that same stock before the day finishes, then you are performing day trading.
Day trading is a trading strategy mainly used by experienced traders who want to obtain profit by buying a selling stock in a short period of time, i.e., the same day.
If you perform overnight trades instead of same.day trades, when this doesn’t count towards your previous trading day count.
Since Robinhood offers commission-free trading, plenty of advanced traders options, and crystal-clear regulations, it has become one of the best alternatives for day trading in the brokerage industry.
Pro Tip: If you want to trade stocks in Robinhood, it is important to pay attention to different factors, such as annual percentage yield, account equity, and buying power.
Learn what to do if you don’t have enough buying power on Robinhood here.
Can You Day Trade On Robinhood?
Yes, you can indeed day trade on Robinhood. The possibility of submitting multiple trades is there, and it can be done both from the Robinhood app and the website platform.
Is day trading illegal, you ask? No, it isn’t, but still, it is heavily regulated by the Financial Industry Regulatory Authority (FINRA.)
That’s why the Pattern Day Trading rule protects Robinhood retail investors that don’t participate daily in the stock market.
Robinhood Day Trading Rules
So, how does day trading really work on Robinhood? There are 4 fundamental rules related to each day trade call on the platform:
- You can make three-day trades in a five-day window. This day trade limit can be revoked depending on factors that we will further explain;
- There’s a day trade counter that warns you before you exceed the total trades allowed depending on your past performance. It is a built-in feature of Robinhood Alerts;
- The rules of day trading change depending on your portfolio value and account type;
- Cryptocurrencies are not considered within day trading rules on Robinhood, but these rules do apply for margin trading on options and stock assets.
How Many Day Trades Can You Make on Robinhood?
There’s a three-day trade limit in any Robinhood Gold Account or Instant Account.
If your margin account happens to perform the fourth-day trade in this five-day period, you will receive a clear warning.
Of course, more than business days, we are actually referring to trading days, which take place during regular market hours.
In some cases, extended hours trading might also count towards your limits and operations placed the previous day.
What Happens if You Make Too Many Day Trades on Robinhood?
If you exceed day trade limits your account icon will be flagged as a pattern day trader.
The pattern day trade protection will prevent you from going back to day trading until you comply with certain demands.
What is a Pattern Day Trader on Robinhood?
You will have pattern day trading notifications on your account if you are about to exceed your day trade limits.
Either way, if you make more than five-day trades, you will be marked as a pattern day trader.
In order to resume day trading, you need to do the following:
- Your portfolio value must be greater than $25,000. You can deposit funds to resolve this day trade call if you must;
- Cryptocurrencies do not count towards your portfolio value on your standard account;
- If you fail to remove Pattern Day Trader limitations, then your account will be blocked for 90 consecutive days.
How Do You Get Unlimited Day Trades on Robinhood?
So, day traders are now quite aware of the dos and don’ts of day trading on Robinhood.
But what if you want to get rid of these limitations? Can you do it?
1. Crypto Day Trading on Robinhood
You can day trade crypto on Robinhood practically without limitations. It is possible to perform as many crypto trades on the same day without experiencing any kind of issue, so you must not worry about it.
2. Trade from a Robinhood Cash Account
If you downgrade from a Robinhood Instant or Gold Profile to a Cash Brokerage Account, then you will indeed experience unlimited day trades.
Nevertheless, some conditions apply to cash accounts:
- You will still need to wait for the two to five day settlement period in order for the stocks to settle;
- Margin accounts that wish to perform unlimited trades must have more than $25,000 in portfolio value;
- Maintaining over $25,000 will be more than enough to get rid of all kinds of day trading limitations.
That’s what you need to know for now! If you have further doubts about this matter, you can always check Robinhood’s Official Website.
For more Robinhood tips and insights, check all the articles we have for you here at GrowFollowing,
FAQ
Can You Day Trade On Robinhood Without 25K USD?
Yes, you can, as long as you respect the three day trade rule. Also, day trading cryptocurrency does not require you to have more than $25k in your portfolio.
Steve specializes in cryptocurrency and finance. As a born researcher, he won’t leave any stone unturned when it comes to topics he covers.