Have you ever been in the middle of an exciting trading session on Webull, only to be hit with that frustrating "Pattern Day Trader" (PDT) flag, putting a halt to your rapid-fire moves? You're not alone! Many active traders encounter this regulatory hurdle, especially when starting out with smaller accounts. But don't despair! This comprehensive guide will walk you through everything you need to know about the PDT rule on Webull and, more importantly, how to reset your PDT status to get back in the game.
Understanding the Pattern Day Trader (PDT) Rule
Before we dive into the reset process, it's crucial to understand what the PDT rule is and why it exists. This rule, implemented by the Financial Industry Regulatory Authority (FINRA), is designed to protect less experienced traders from excessive risk-taking, particularly when using margin.
What is a Day Trade? A "day trade" is defined as buying and selling (or selling and buying) the same security within the same trading day in a margin account. This includes trades placed during pre-market and after-hours sessions if both the opening and closing transactions occur within the same 24-hour period (8 PM ET to 7:59 PM ET the next calendar day on Webull).
The PDT Definition: You are flagged as a Pattern Day Trader if you execute four or more day trades within a rolling five-business-day period in a margin account, and these day trades constitute more than 6% of your total trading activity during that period.
The $25,000 Equity Requirement: Once flagged as a PDT, you are required to maintain a minimum equity balance of $25,000 in your margin account at the close of business every day that you wish to day trade. If your account falls below this threshold, you will be subject to an Equity Maintenance (EM) call, and your account will be restricted to closing-only transactions until the call is met or your balance is brought above $25,000.
The Impact of the PDT Flag: Being flagged as a PDT with an account balance under $25,000 means:
You cannot open new positions.
Your account will be set to "closing-only" transactions.
You'll be restricted from day trading until you either deposit funds to reach $25,000 or the PDT flag is removed (which usually takes 90 days if you don't reset it, or you use your one-time reset).
It's a frustrating situation, but thankfully, Webull offers a way to reset your PDT status.
Step 1: Confirm Your PDT Status and Understand the Implications
Alright, let's get started! The very first thing you need to do is verify if you've actually been flagged as a Pattern Day Trader on Webull. Sometimes, traders might misinterpret their trading activity.
How to Check Your PDT Status on Webull
Open the Webull App: Launch the Webull mobile application on your smartphone.
Navigate to Your Account: Tap on the "Accounts" icon, usually located at the bottom center of your screen.
Find Day Trading Information: Look for a section related to "Day Trading" or "Trading Power." Webull provides a "Day Trading Counter" that tracks your day trades within the rolling five-business-day period. This is an incredibly useful tool to monitor your activity and avoid being flagged in the first place!
Check for the PDT Flag: If you have been flagged, you will typically see a clear notification or a "Yes" next to "Marked as PDT" in this section. You'll also likely receive in-app notifications or emails from Webull regarding your status change.
Important Note: The PDT rule only applies to margin accounts. If you are using a cash account, the PDT rule does not apply to you. However, cash accounts have their own limitations, primarily regarding settled funds. When you sell a stock in a cash account, the funds take T+2 business days to settle before you can use them again for new purchases. This means if you buy and sell a stock on Monday in a cash account, you cannot use those funds for another purchase until Wednesday.
Step 2: Evaluate Your Eligibility for a PDT Reset
Webull, like many brokers, offers a one-time PDT reset per primary account for the lifetime of the account. This is a crucial piece of information! Use it wisely.
Conditions for PDT Reset Eligibility:
Margin Account: The PDT flag only applies to margin accounts, so naturally, the reset is only for margin accounts.
One-Time Reset: You must not have used your one-time PDT reset already. If you have, the option to request a reset will likely be unavailable or greyed out.
Understanding the Rule: Webull (and FINRA) expects you to understand the PDT rule and attest that you will endeavor not to engage in pattern day trading again without meeting the $25,000 equity requirement.
If you've already used your one-time reset, don't worry! We'll discuss other options to get back to trading later in this guide.
Step 3: Initiating the PDT Reset Request on Webull
Assuming you are eligible for the one-time reset, here's how to typically request it within the Webull app:
Step 3.1: Accessing the Request Option
Go to the "Accounts" Tab: From the Webull homepage, tap on the "Accounts" icon at the bottom.
Locate Day Trading Section: Within your account details, find the "Day Trading" section.
Identify the PDT Status: You should see where it indicates "Marked as PDT" and likely a "Yes" next to it.
Tap to Request Removal: Next to "Marked as PDT" (or within that specific section), you should see an option to "Request to Remove PDT Status" or a similar button. Tap on this option.
Step 3.2: Confirming Your Understanding
Webull will then present you with a disclaimer or a series of confirmations.
Read the Disclaimer Carefully: This step is important! You'll be asked to acknowledge that you understand the definition of a pattern day trader and the implications of being flagged.
Attest to Future Compliance: You will typically need to confirm that you will make an effort to avoid becoming a pattern day trader again, or that you will maintain the $25,000 equity requirement if you intend to day trade frequently.
Submit Your Request: After reviewing and agreeing to the terms, submit your request.
Step 3.3: Processing Time and Confirmation
Processing Time: PDT reset requests submitted on Webull are generally processed fairly quickly, often within 1-2 business days. Some sources indicate that requests submitted after a certain time (e.g., 3:00 PM CT) might be processed the following night.
Confirmation: You should receive a confirmation within the app or via email once your PDT status has been successfully reset.
Monitor Your Account: After the expected processing time, check your "Day Trading Counter" in the "Accounts" section again to confirm the flag has been removed and your day trade count has been reset. You'll typically have your 3 day trades back for the rolling 5-business-day period.
Step 4: After the Reset: Strategies to Avoid Future PDT Flags
Congratulations, your PDT flag has been removed! Now, the real work begins: staying compliant to avoid getting flagged again, especially since you've used your one-time reset.
Step 4.1: Understanding Your Day Trade Limits
The "3-Day Trade" Rule: Remember, in a margin account with under $25,000, you are permitted a maximum of three day trades within a rolling five-business-day period.
Rolling 5-Business Day Period: This is crucial. It's not a calendar week. It's any five consecutive business days where you've made day trades. If you make a day trade on Monday, it counts for five business days from that Monday.
Utilize the Day Trading Counter: Webull's in-app day trading counter is your best friend. Check it religiously before placing any trades that might be considered a day trade.
Step 4.2: Alternative Strategies to Day Trade with Under $25,000
If maintaining $25,000 in your account isn't feasible, consider these strategies to avoid the PDT rule:
Option A: Swing Trading:
What it is: Instead of entering and exiting positions on the same day, swing trading involves holding positions for more than one trading day (typically a few days to several weeks) to capture short-to-medium term price movements.
Benefits: This completely bypasses the PDT rule as trades are not opened and closed within the same day.
Considerations: Requires different analysis techniques and patience. Funds from a sale are available immediately for new purchases (if on margin) or after T+2 days (if on cash).
Option B: Using a Cash Account:
What it is: A cash account means you trade only with the funds you have deposited, without borrowing on margin.
Benefits: The PDT rule does NOT apply to cash accounts! You can make an unlimited number of day trades as long as you have settled funds available.
Considerations: This is the biggest hurdle. Funds from a sale typically take T+2 business days to settle. This means if you buy and sell a stock for $1,000 on Monday, that $1,000 won't be available for another trade until Wednesday. You'd need a larger cash balance to day trade frequently. Many new traders will cycle through their capital over several days.
Option C: Trading Non-Equity Securities:
What it is: The PDT rule primarily applies to equities and equity options. It does not apply to futures trading or forex trading.
Benefits: You can day trade futures or forex without the $25,000 minimum.
Considerations: These markets have their own unique risks, leverage, and learning curves. It's essential to educate yourself thoroughly before venturing into these instruments.
Option D: Increasing Your Account Equity:
What it is: The most straightforward, albeit sometimes challenging, solution.
Benefits: If your margin account equity consistently stays above $25,000 (at the close of business), you are free to make an unlimited number of day trades.
Considerations: Requires significant capital.
Step 5: If You've Used Your One-Time Reset (And Still Get Flagged)
If you find yourself flagged again after using your one-time reset, the options become more limited:
Step 5.1: The 90-Calendar Day Restriction:
Your account will remain flagged as a PDT, and you will be restricted to closing-only transactions for 90 calendar days.
This 90-day period starts from the day of your latest day trade that triggered the flag.
During this time, you cannot open new positions, only close existing ones.
Step 5.2: Depositing Funds to Reach $25,000:
This is the quickest way to regain full day trading privileges if you've been flagged again and cannot reset.
Deposit enough funds into your margin account to bring your equity balance to $25,000 or more at the close of business. Once you meet this threshold, the day trading restrictions will typically be lifted the following trading day.
Step 5.3: Contacting Webull Support (Limited Success):
While you can always reach out to Webull customer support, be aware that their ability to remove a PDT flag after the one-time reset is extremely limited, usually reserved for "extraordinary circumstances." It's unlikely they can bypass the regulatory rules set by FINRA.
Final Thoughts
Navigating the PDT rule can be a source of frustration for new traders, but it's a regulatory measure designed to protect you. By understanding the rules, utilizing Webull's tools, and employing smart trading strategies, you can minimize its impact and continue your trading journey effectively. Always remember to prioritize risk management and continuous learning in your trading endeavors.
10 Related FAQ Questions (How to...)
Here are 10 common questions related to the PDT rule and Webull, along with quick answers:
How to avoid the PDT rule on Webull if I have less than $25,000? You can avoid the PDT rule by either using a cash account (though funds take T+2 days to settle) or by limiting your day trades to three or fewer within a rolling five-business-day period in a margin account. Alternatively, consider swing trading or exploring non-equity markets like futures.
How to check my remaining day trades on Webull? Open the Webull app, go to the "Accounts" tab, and look for the "Day Trading" section. You'll typically find a "Day Trading Counter" that shows your remaining day trades within the rolling five-business-day period.
How to fund my Webull account to meet the $25,000 PDT requirement? You can fund your Webull account via ACH transfer from your bank, wire transfer, or by transferring an existing brokerage account to Webull. Ensure the funds settle and bring your account equity (cash + marginable securities) above $25,000 at the close of business.
How to know if a trade counts as a day trade on Webull? A trade counts as a day trade if you open and close a position in the same security within the same trading day in a margin account. This applies to both long (buy then sell) and short (sell then buy back) positions.
How to switch from a margin account to a cash account on Webull? Contact Webull customer support through the app or their website to inquire about converting your margin account to a cash account. Be aware that this may have tax implications and impact your trading capabilities.
How to regain day trading privileges if I'm stuck with the 90-day restriction on Webull? The most effective way is to deposit funds to bring your margin account equity above $25,000. Otherwise, you must wait out the full 90-calendar day restriction period from your last day trade.
How to understand Webull's specific day trade counting period? Webull counts a day trade if both the opening and closing transactions occur between 8 PM ET on one calendar day and 7:59 PM ET the following calendar day. This includes pre-market and after-hours trading within that window.
How to utilize options to avoid the PDT rule on Webull? While the PDT rule applies to equity options in margin accounts, you can still use strategies like selling covered calls or cash-secured puts, where you don't necessarily engage in rapid buy-and-sell cycles within the same day. However, if you are actively buying and selling options contracts multiple times a day in a margin account, you are still subject to the PDT rule.
How to use paper trading on Webull to practice without PDT restrictions? Webull offers a robust paper trading feature. Access it through the app (often found under "Menu" or "More" options, then "Paper Trading"). This allows you to practice day trading strategies with virtual money without any real-world PDT implications.
How to contact Webull support for PDT-related issues? You can contact Webull customer support directly through the Webull app's "Help Center" or "Customer Service" section. They typically offer in-app chat, email, or phone support. Be prepared to provide your account details and specific questions regarding your PDT status.