Yes, being flagged as a Pattern Day Trader (PDT) can be "bad" or inconvenient because it triggers a major requirement: you must maintain at least $25,000 in your margin account to day trade, and if your balance falls below that, you face severe restrictions, like being unable to day trade until funds are added or potentially having your account locked, though a one-time waiver is often available by contacting your broker. The flag is permanent unless you get it removed, but it's manageable if you meet the equity requirement or switch to a cash account (though that limits margin trading).
This means you can still trade, or open new positions, but you'll be restricted from day-trading. If you violate these restrictions, what might happen next will vary depending on your broker. But in many cases, your account will be restricted to exiting (i.e., liquidating) positions only.
What happens if I'm flagged as a PDT with less than $25,000 in my account? If you're flagged while holding less than $25,000 in equity, an Equity Maintenance (EM) Call is issued. You must bring your account equity above $25,000 to regain day trading access.
Are day traders taxed? If you're new to the game, that's an important question to ask. Day trading is taxed at the ordinary income tax rate because your profits aren't considered long-term capital gains. Platform fees and interest can also impact your profits.
Cons of Being a Pattern Day Trader
The biggest and most obvious downside to being a pattern day trader is that you're contending with a significant amount of risk. Using leverage and margin to trade compounds that risk, too, so day trading does require thick skin and the ability to handle a lot of risk.
Per FINRA regulation, PDT flags will remain on your account indefinitely, outside of extraordinary circumstances.
On Mobile: Tap on the Webull logo to access your account settings and navigate to Risk Level > Caution. From there, select EM Call and then tap Reset PDT Flag. On Desktop: Click Account (if hidden click More), find Risk Level under Account Details widget, click EM Call > Reset PDT.
Day trading presents similarities with some types of gambling, mainly with online and skill-based gambling. Even though day trading is not solely based on chance, due to its characteristic of short time between purchases and sales, it is often vulnerable to sudden price changes.
Yes, there are two ways to have the restriction removed. You may call 855-525-7634 and request to use your one-time reset request. The removal of the restriction may take 1-2 business days.
If you are marked as a PDT, the rule's primary consequence is an immediate and strict $25,000 minimum equity requirement. If your account value drops even a dollar below this threshold, you will be restricted from opening any new positions for 90 days, effectively locking you out of your main trading strategy.
You will not earn interest on uninvested cash: When you're flagged as a Pattern Day Trader (PDT), you will not earn interest through the brokerage cash sweep program until the PDT flag is removed and you re-enroll into the program. Once unenrolled, manual re-enrollment in the brokerage cash sweep program is allowed.
Pattern day trading restrictions don't apply to non-margin accounts, they only apply to margin accounts with a total portfolio value that's less than $25,000 (including uninvested GBP and USD cash). This means you can trade securities and options in a non-margin account without worrying about your number of day trades.
Options AI customers are able to request one (1) PDT Reset in the lifetime of the account. If submitted prior to 4:00pm EST, a successful PDT reset will usually take effect the following trading day, but can take up to two (2) business days.
Tips & tricks on Avoiding the PDT Rule
Does Zelle Report Payments to the IRS: Form 1099-K Details. IRS Form 1099-K reports payments received for goods or services during the tax year from credit, debit, or stored value cards and TPSOs. The 2025 reporting threshold is $2,500 or more, which will be reduced to $600 in 2026.
The "20k rule" refers to the traditional IRS threshold for reporting income from payment apps and online marketplaces on Form 1099-K: over $20,000 in gross payments AND more than 200 transactions in a calendar year. While a law (the American Rescue Plan) temporarily lowered the threshold to $600, recent legislation, the One Big Beautiful Bill Act (OBBBA) (OBBBA), has reinstated the $20,000/200-transaction rule for tax years starting in 2025, providing relief for casual sellers and gig workers.
Reporting cash payments
A person must file Form 8300 if they receive cash of more than $10,000 from the same payer or agent: In one lump sum. In two or more related payments within 24 hours. For example, a 24-hour period is 11 a.m. Tuesday to 11 a.m. Wednesday.