Pattern Day Trading on Robinhood: What Happens When You Get Flagged & How to Handle It

Getting flagged as a pattern day trader on Robinhood can feel like hitting a roadblock in your trading journey. I’ve seen many traders panic when they suddenly can’t execute trades like before. Let’s break down exactly what happens when you get marked as a pattern day trader on Robinhood, and more importantly, what you can do about it.

What Exactly Is Pattern Day Trading?

Before diving into the consequences, let’s clarify what pattern day trading actually means. According to FINRA regulations (which Robinhood must follow):

A day trade happens when you

• Buy and sell the same stock or exchange-traded product (ETP) within a single trading day
• Open and close the same options contracts within a single trading day

You become a pattern day trader when:

• You make 4 or more day trades within 5 trading days
• Those day trades represent more than 6% of your total trading activity during that period

The trading day officially ends at 8 PM ET on the current trading day. Any trades made during overnight hours (8 PM-12 AM ET) count toward the next trading day.

What Happens When Robinhood Flags You as a Pattern Day Trader

When your account gets flagged for pattern day trading on Robinhood, several important changes happen:

Immediate Restrictions

If your account balance is below $25,000:

• You can’t place any new day trades until you bring your portfolio value above $25,000
• You can still close positions you already own
• You might face a position closing only restriction if you continue to day trade

Impact on Account Features

When flagged as a pattern day trader with less than $25k

• You’re immediately removed from the Stock Lending program
• Any stocks you’ve loaned out are returned to your account
• Your participation in the Brokerage Cash Sweep program is paused
• Any swept cash is returned from program banks to your account
• You won’t earn interest while flagged as a PDT in a margin account

Flag Duration

Since September 5, 2023, Robinhood’s PDT policy follows FINRA regulation more strictly

• PDT flags remain on your account indefinitely (outside extraordinary circumstances)
• The flag applies at the user level, not just the individual account

How to Check If You’re Close to Being Flagged

To avoid getting surprised by a PDT flag, Robinhood provides tools to help you monitor your day trading activity:

1. In the app, go to Account → Menu (3 bars) or Settings
2. Select Investing → Day trades
3. This shows you how many day trades you’ve made in the current 5-trading-day period

Robinhood also offers Pattern Day Trade Protection which alerts you when you’re about to place a 4th day trade, giving you the option to proceed or cancel.

Your Options After Getting Flagged as a Pattern Day Trader

If you’ve been flagged, don’t panic! You have several options:

1. Maintain a $25,000+ Portfolio Value

If you can maintain a portfolio value above $25,000, you can continue day trading without restrictions. However:

• This is based on the previous day’s closing balance (valued at 4 PM ET prices)
• Crypto positions, futures positions, and available margin don’t count toward this value
• Stock loans don’t count toward the $25,000 minimum

2. Use Your One-Time Flag Removal

Robinhood offers a one-time courtesy PDT flag removal:

• This can only be used once per user (not once per account)
• After you use it, you won’t receive another one
• To request this, visit the PDT section in your Robinhood app

3. Switch to a Cash Account

This is often the best solution for most traders:

• Cash accounts aren’t subject to PDT regulations at all
• You can day trade freely without the $25,000 minimum
• You regain access to the Stock Lending and Brokerage Cash Sweep programs
• However, you won’t be able to trade on unsettled funds from stock, ETP, and option sales

To switch to a cash account, follow the steps in the Switch accounts section of the Robinhood app.

4. Wait It Out

If you don’t need to day trade, you can simply:

• Wait until you have fewer than 3 day trades in the rolling 5-trading-day period
• Monitor your Day trade counter carefully
• Use Pattern Day Trade Protection to avoid accidentally hitting that 4th trade

Common Day Trading Scenarios Explained

Let’s look at some examples to understand what counts as a day trade:

Example 1: Basic Buy and Sell

Starting with zero shares of ABC stock:

• Buy 1 ABC
• Sell 1 ABC
  This is 1 day trade because you bought and sold ABC in the same day.

Example 2: Multiple Buys and Sells

Starting with zero shares of ABC stock:

• Buy 1 ABC
• Buy 2 ABC
• Buy 7 ABC
• Sell 1 ABC
• Sell 5 ABC
• Sell 4 ABC
  This is still just 1 day trade because there’s only 1 change in direction between buys and sells.

Example 3: Extended Hours Trading

• Buy 5 ABC at 8:01 PM ET on Monday
• Sell 1 ABC at 10 AM ET on Tuesday
  This counts as 1 day trade because both trades occur on the same trading day (Tuesday).

Example 4: Multiple Direction Changes

• Buy 50 ABC
• Sell 15 ABC
• Sell 35 ABC
• Buy 10 ABC
• Sell 10 ABC
  This counts as 2 day trades because there are 2 changes in direction from buys to sells.

Tricky Situations to Watch Out For

Partial Executions

If you place large orders or trade low-volume stocks, your orders might execute in multiple parts. This can be risky because:

• Each execution counts toward your day trade count
• If you sell before all parts of your buy are filled, each sell could count as a separate day trade

For example, if your order to buy 10,000 shares executes in 5 parts, and you start selling before all purchases complete, you could rack up multiple day trades very quickly!

Cost Basis vs. Day Trade Designation

The rules for designating day trades are different from the rules for cost basis:

• Day trades are based on same-day buys and sells
• Cost basis uses FIFO (first in, first out) regardless of when shares were bought

So if you bought shares yesterday and today, then sold today, it’s still a day trade even though your cost basis might use yesterday’s shares.

The PDT Rule and Multiple Robinhood Accounts

If you have multiple Robinhood accounts, remember:

• PDT flags apply at the user level, not the account level
• If one margin account gets flagged and you switch it to cash, then switch another account to margin, the PDT flag follows you
• The one-time PDT flag removal applies to you as a user, not to each individual account

My Advice for Avoiding PDT Issues

From my experience helping traders navigate these waters, here are my best tips:

1. Enable Pattern Day Trade Protection – This feature will warn you before placing that critical 4th day trade.

2. Consider a cash account for active trading – You can day trade freely without the $25k minimum, though you’ll need to be mindful of settlement times.

3. If you must use margin, maintain well above $25k – Market fluctuations could drop you below the threshold, so keep a buffer.

4. Track your trades carefully – The 5-trading-day window doesn’t necessarily align with the calendar week.

5. Be extra cautious with large orders – Multiple executions can create day trade issues you didn’t expect.

6. Save your one-time removal for when you really need it – Once it’s gone, it’s gone for good!

Final Thoughts

Getting marked as a pattern day trader on Robinhood isn’t the end of the world, but it does require understanding the rules and making smart choices about how to proceed. Whether you decide to meet the $25k requirement, switch to a cash account, or just trade more conservatively, knowing exactly what happens when flagged helps you make the best decision for your trading style.

Remember that these PDT rules aren’t unique to Robinhood – they’re FINRA regulations that all brokerages must follow. Robinhood has simply added some helpful tools like Pattern Day Trade Protection to help you navigate them more easily.

Have you been flagged as a pattern day trader? What route did you take to continue trading? I’d love to hear about your experiences in the comments below!

To remove Pattern Day Trader (PDT) status on Robinhood, switch to a cash account in settings, which bypasses the PDT rule and is not subject to FINRA’s day trading restrictions. You can also use the one-time PDT waiver, but this must be used carefully as you cannot get another one.

If you are flagged as a Pattern Day Trader (PDT), your margin account is subject to rules requiring a minimum equity of $25,000 to continue day trading. If your account falls below this amount, it will be restricted to closing only transactions until the minimum is restored.