Alexis Kestler
If you‘re an active trader looking to make quick profits off intraday stock price movements, you may be interested in day trading on Robinhood. The popular commission-free trading platform has made it easy for anyone to get started buying and selling securities with zero fees.
But there‘s one catch – Robinhood limits the number of day trades you can make on their platform.
Exceed the limits, and your account faces restrictions on further day trading activities. So it‘s crucial to understand exactly how many trades you can make.
In this comprehensive 2800+ word guide, I‘ll give you an in-depth look at day trading with Robinhood, including:
- What is a day trade?
- The standard day trade limits
- What happens when you exceed limits
- How to get unlimited day trades
- Tips for managing day trades
- And much more!
Let‘s get right into it…this is everything you need to know about making day trades on Robinhood‘s platform.
What Counts as a Day Trade on Robinhood?
First things first – what exactly constitutes a "day trade" on Robinhood?
A day trade refers to buying and selling (or short selling and buying back) the same security within the same regular trading session, which runs from 9:30AM to 4PM Eastern Time.
Some examples of day trades on Robinhood include:
- Buying shares of Apple at 10:00AM and selling at 1:30PM
- Short selling Tesla shares at 11:15AM and covering by 3:45PM
- Buying call options for Microsoft at open and selling the contracts a few hours later
As you can see, any time you open and close a position within the same trading day, it‘s considered a day trade for the purposes of tracking your limits.
Key Points:
- Day trades only count between standard market hours of 9:30AM – 4PM Eastern
- Pre-market and after hours trades do NOT count as day trades
- Applies to stocks, options, and crypto (but not crypto)
- Closing a position opened the previous day does NOT count
So now that you know what constitutes a day trade, let‘s look at the number of trades you‘re allowed…
Robinhood‘s Standard Day Trading Limits
The standard limit across all basic Robinhood accounts is 3 day trades within a rolling 5 trading day period. This applies to Robinhood Instant, Robinhood Gold, and Cash accounts.
For example:
- If you make 2 day trades on Monday and 1 on Tuesday, you have 2 remaining for the rest of the week
- Trades from the previous Friday no longer count towards your limit
- The 5 day window continuously rolls forward each day
Robinhood enforces these day trading rules through a built-in day trade counter displayed prominently at the top of your app homepage.
It will show you how many trades you have left before hitting the 3 day trade limit over any 5 day period. Once you reach the limit, you will get a warning message preventing any additional trades.
Key Points:
- 3 trades per 5 trading days allowed by default
- Rolling 5 day period continuously updated
- In-app counter shows trades remaining
- Applies to all standard Robinhood accounts
So what happens if you do exceed the limit? Let‘s discuss…
Consequences for Exceeding Day Trade Limits
If you exceed the standard 3 day trades in 5 days limit, your Robinhood account will be immediately flagged with a "Pattern Day Trader" label.
This has two major implications:
- You cannot make any new day trades for 90 days
- You must maintain $25K+ equity to continue day trading
Even though you can still close out existing positions, new intraday trades will be blocked for 90 calendar days.
In addition, you now need over $25,000 in your account to remove the PDT label and resume day trading. Unlike other brokers, Robinhood‘s day trade limits cannot be reset by simply waiting 5 trading days. The PDT flag stays active until you meet the minimum equity requirement.
Key Points:
- Exceeding 3 trades per 5 days triggers Pattern Day Trader label
- No new day trades allowed for 90 days
- Need $25K minimum equity to remove PDT
- Restrictions persist for 90 days or until $25K met
This PDT label is designed to protect small retail traders from taking on excessive risk through active day trading. But for seasoned traders with sufficient capital, meeting the minimum equity threshold can remove these limits.
Now let‘s look at how to get unlimited day trades on Robinhood…
How to Get Unlimited Day Trades on Robinhood
Robinhood provides several paths to removing day trading limits for active traders:
1. Upgrade to a Cash Account
One way is to downgrade from an Instant/Gold account to a basic Cash account.
Cash accounts have unlimited day trading, with a couple caveats:
- You must wait for trades to settle before using the proceeds
- Stock sale proceeds can take 2-3 days to settle into your account
- No instant deposits or Gold features like Level 2 data
If you don‘t mind waiting for settlement, this is the easiest way to day trade freely on Robinhood. Just be mindful that your buying power lags by a few days.
2. Maintain $25,000+ Equity
The second way to get unlimited trades is meeting the PDT minimum equity requirement of over $25,000.
- Must maintain $25K+ at all times
- Applies across all your Robinhood accounts
- Crypto does NOT count towards the $25K
- No trade limits once over $25K equity
This allows unlimited day trades on a standard Robinhood Instant or Gold account. But if your balance drops below $25K, restrictions will kick back in.
3. Day Trade Cryptocurrencies
Finally, you can day trade crypto like Bitcoin and Ethereum endlessly without restrictions. Robinhood‘s crypto trading is not subject to the PDT rules.
Key Points:
- Cash account = unlimited day trades
- Keep $25K+ equity to remove PDT label
- Or just day trade crypto!
So those are the main methods for removing day trading limits on Robinhood. Now let‘s get into some tips for managing your trades…
Tips for Managing Day Trades on Robinhood
Here are some useful tips for day trading successfully within Robinhood‘s limits:
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Carefully track your trade counter – Monitor how many you have left in each 5 day period. Don‘t lose track!
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Scale position sizes – Trade smaller share sizes if running low on trades for the week.
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Use mental stops – Can‘t day trade? Use disciplined sell rules instead of stop losses.
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Focus on your best setups – Save day trades for your highest conviction trades.
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Use multiple brokers – Have accounts at Webull, TastyWorks, etc. to get more trades.
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Try cash account – Eliminates trade limits if you don‘t mind settlement periods.
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Meet $25K minimum – Deposit funds if close to unlocking unlimited trades.
Frequently Asked Questions
Does extended hours trading count as day trades?
Typically only trades within normal market hours count. But occasionally pre-market and after-hours trades may also be considered day trades, especially if part of an intraday strategy. Check with Robinhood to be sure.
Can I day trade options on Robinhood?
Yes, each options trade counts the same as stock trades – buying and selling a contract equals 1 day trade. This includes spreads and writing naked puts/calls (which requires approval).
How do day trade limits work across multiple Robinhood accounts?
It‘s based on total trades across all linked accounts. Robinhood looks at your day trading activity collectively rather than individually per account.
Can I day trade an ETF like SPY on Robinhood?
Yes, trading ETFs follows the same PDT rules. Buying and selling SPY or QQQ in the same day counts as 1 day trade. All equities and options are treated equally.
Does switching to a cash account avoid day trade limits?
Yes, cash accounts provide unlimited intraday trading without PDT restrictions. The only catch is waiting 2 business days for proceeds to settle when selling stocks. An easy way to day trade freely.
Can I reset day trades by depositing $25K into Robinhood?
Unfortunately depositing over $25K doesn‘t immediately reset PDT status. You must wait for the 90 day suspension period to end. Maintaining $25K+ prevents future restrictions.
Are day trading rules the same on the Robinhood web platform?
Yes, the day trade limits apply equally whether you use the Robinhood mobile app, website, or desktop platform. Trading activity is synced across all platforms.
Hopefully these common questions provide additional clarity around day trading with Robinhood!
The Bottom Line – Trade Carefully Within Limits
Let‘s quickly recap the key points:
- Know the standard limit is 3 day trades per 5 days
- Exceeding triggers 90 day suspension
- Pattern Day Trader label requires $25K minimum
- Options include cash account, meeting $25K, or crypto trading
- Manage trades carefully and track your daily usage
While Robinhood makes active trading accessible, ensure you follow the rules to avoid disruptions. The same regulations still apply even with zero commissions.
With some prudent planning, you can day trade successfully despite the limits. Just be conscious of your usage, and be prepared if you ever exceed the thresholds.
And if you decide day trading isn‘t for you, Robinhood remains a great platform for long-term investors looking for commission-free trades. The choice is yours!
Whatever your investing goals, I hope this overview gives you confidence in day trading smartly within Robinhood‘s regulatory framework. Let me know if you have any other questions!
