Day trading involves buying and selling the same security or opening and closing the same options contract in a margin account within a single trading day.
It’s possible to day trade on Robinhood, but due to the inherent risks, it’s important to understand Robinhood’s day trade rules, limits and available tools to trade effectively and minimize potential losses.
Can I day trade on Robinhood?
Yes, you can day trade on Robinhood, but there are important rules and restrictions to be aware of. Robinhood, like all brokerage firms in the US, adheres to FINRA’s Pattern Day Trader (PDT) rule, which requires that you maintain a minimum account balance of $25,000 if you make four or more day trades within five business days.(1)
If your account is flagged as a pattern day trader and your balance falls below $25,000, you may be restricted from making further day trades.
How to day trade on Robinhood
To day trade on Robinhood, familiarize yourself with the platform’s features and the specific rules surrounding day trading.
Begin by ensuring that your account meets the Pattern Day Trader (PDT) rule, which requires maintaining a minimum balance of $25,000 if you plan to execute four or more day trades within a five-day period.
Place more than four day trades within a five day trading period and Robinhood will flag your account for pattern day trading. This means you can’t place day trades until you bring your portfolio value above $25,000 or switch to a cash account. Track the number of day trades you’ve made by scrolling down to the day trades section from the Investing page of your account.
PDT rules only apply to margin accounts. With a cash account, you can trade without worrying about your number of day trades since you’re paying for the securities in full. You just won’t be able to trade on unsettled funds with a cash account.
Can you day trade on Robinhood without $25k?
If you have a margin account with less than $25,000 and make four or more day trades within a five-day period, your account will be flagged for pattern day trading. If you have less than $25,000, switching to a cash account might be good option.
Day trading is technically not permitted in a cash account. Under FINRA rules, purchasing a security, paying for it in full and then selling the same security is not considered a day trade.(1)
In a cash account, you can only trade with the settled funds available in your account. This means that after selling a security, you must wait for the trade to settle before you can use those funds to make another trade. This restriction can limit the frequency of your day trades, as you cannot immediately reinvest the proceeds from a sale. However, if you have sufficient funds in your account, you can buy and sell the same security in the same day. As of May 28, 2024, most securities transactions will settle the next business day.(2)
To downgrade from a Robinhood margin account to a cash account, go to the Investing page of your account, find Account type and select Switch to cash account.
What tools does Robinhood offer for day traders?
Investors can use Robinhood’s trending lists to identify popular securities and perform a close analysis of performance with charting tools. Gold members have access to premium Morningstar research reports and Level 2 market data.
All Robinhood customers
Robinhood Gold
Day trade counter. Track how many day trades you’ve made in the current 5 trading day period.
One-time pattern day trading flag removal. Customers flagged as a pattern day traders may be eligible for a one time removal of their pattern day trading flag restrictions.
Pattern day trade protection. Get an alert when you’re about to place a 4th day trade.
Market news. Browse a feed of news articles from the Financial Post, MarketWatch, Reuters and the New York Times.
Lists. View curated lists of stocks and ETFs that are most popular on Robinhood.
Earnings calendar. Check estimated projections and earnings on quarterly reports.
Analyst ratings. Use analyst ratings to help you decide whether to buy, hold or sell.
Advanced charts. Equip chart indicators to analyze trends in a stock’s performance.
Trading Trends. View the trading activity of Robinhood customers, hedgue funds and company insiders.
Margin trading. Get the first $1,000 of margin interest free.
Professional research. Receive unlimited access to Morningstar’s premium research reports.
Level 2 market data. Access Level 2 market data from Nasdaq.
Bigger instant deposits. Access up to $50,000 in instant deposits.
Watch our short video on how to execute a trade on Robinhood, and how its charts and tools compare to other trading platforms.
Pros and cons of day trading on Robinhood
Consider these benefits and drawbacks before attempting to day trade on Robinhood:
Pros
Commission-free trades. Trade stocks, options, ETFs and crypto without commission.
No options contract fees. Trade options without per-contract fees.
User-friendly interface. Robinhood is designed with simplicity in mind, making it easy to navigate and execute trades quickly.
Instant deposits. Access up to $1,000 — or up to $50,000 with Robinhood Gold — instantly after you initiate a deposit.
Pattern day trading tools. Leverage Robinhood’s day trade counter, one-time pattern day trading flag removal and pattern day trade protection features to manage your trades more effectively and avoid potential restrictions.
Cons
No paper trading. Robinhood doesn’t offer a paper trading feature, making it difficult for beginners to practice day trading without risking real money.
Limited advanced trading tools. Robinhood lacks advanced trading tools and research resources that are available on other platforms, which can be a disadvantage for more experienced day traders.
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Bottom line
Day trading is risky under the best of circumstances. And while some platforms are equipped to cater to advanced traders, Robinhood’s insufficient research and analysis tools make it an inappropriate choice for day traders.
The ideal investment method for your funds depends on your trading experience and long-term financial goals. Compare trading platform options with multiple providers to find the brokerage best suited to your needs.
Frequently asked questions
Can I short stocks on Robinhood?
No, you can’t short stocks on Robinhood. Short selling is a complex trading strategy that involves borrowing shares, selling them, buying them back, repaying the shares at a lower price and profiting from the price difference. Platforms like Interactive Brokers and Charles Schwab let traders short stocks, but Robinhood doesn’t.
Do instant deposits count towards the $25,000 minimum for pattern day trading?
No, instant deposits don’t count toward the $25,000 minimum for the pattern day trading rule until the funds have settled in five days time. While instant deposits immediately increase your buying power, they don’t count toward your overall equity until the funds have settled.
How can I remove my pattern day trader status on Robinhood?
You can bring your account balance above $25,000, downgrade your account to a Robinhood cash account, contact Robinhood to request a reset of your PDT status or wait the standard 90 days for the status to clear.
Can you day trade crypto on Robinhood ?
Yes, you can day trade cryptocurrency on Robinhood. Unlike stocks, cryptocurrencies on Robinhood are not subject to the Pattern Day Trader (PDT) rule, which means you can execute as many day trades as you want without the $25,000 account balance requirement.
Matt Miczulski is an investments editor at Finder. With over 450 bylines, Matt dissects and reviews brokers and investing platforms to expose perks and pain points, explores investment products and concepts and covers market news, making investing more accessible and helping readers to make informed financial decisions.
Before joining Finder in 2021, Matt covered everything from finance news and banking to debt and travel for FinanceBuzz. His expertise and analysis on investing and other financial topics has been featured on CBS, MSN, Best Company and Consolidated Credit, among others. Matt holds a BA in history from William Paterson University. See full bio
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