For some of us that do not have the $25k to trade everyday. We are only allowed to complete 3 trade out of a 5 day week. If you trade more than this your account will be labeled as a PDT. A day trade consists of opening and closing the same position the same day. More than three such in five days constitutes pattern day trading: i.e., four day trades in five days. So, if on Monday you place a buy order for, say, AAPL at 9AM, another buy order for AAPL at 10AM, and another buy order for AAPL at 11AM, then sell the whole bunch at noon, you have three day trades. So, if you make another day trade on Friday, you will be flagged as a pattern day trader. Likewise, if you do one day trade on Monday, one on Tuesday, and one on Wednesday, then do another on Friday, you will be flagged as a pattern day trader.
As a practical matter, daytrading in a cash account is difficult to accomplish. This is due to the application of two related rules known as "good faith" and "freeriding" requirements. These rules are not part of the PDT rules and stand on their own. In summary, vastly oversimplified, these rules require that you have all the money you need to settle trades in a cash account available even if the stock is sold before settlement. Moreover, and herein lies the rub, the good faith issue arises when the stock is sold prior to settlement even if the customer funds the trade subsequent to sale but prior to settlement. The freeriding provisions kick in whenever funds are not available on the settlement date. There are numerous discussions of their application on the internet. Reading some of the examples that are provided will likely cause a person to realize that compliance might be more trouble than it is worth.
