Updated 20 Sep 2026: we corrected the rule's start year from 1974 to 2001 and moved the broker-timeline note here.
Updated 16 Sep 2026: FINRA's rule took effect on 4 June 2026, but brokers have until 20 October 2027 to move accounts over. Your broker may still apply the $25,000 minimum. Under the new rules, repeatedly unmet intraday margin calls can restrict an account for up to 90 days. Source: FINRA.
Rule change · US retail brokerage · 2 September 2026
For twenty-five years, a US trader with less than $25,000 could not legally day-trade more than three times in five business days. That rule is gone — and almost nobody has rewritten their strategy guidance for it.
What changed
Pattern day trader, 2001–2026
The pattern-day-trader rule required any margin account making four or more day trades in five business days to hold at least $25,000 in equity. Fall below it and the account was frozen to closing orders until it was topped up. It was introduced after the day-trading boom of the late 1990s, on the theory that frequent intraday trading warranted a higher capital cushion.
The SEC approved its elimination in April 2026. The $25,000 threshold is replaced by the ordinary $2,000 minimum for a margin account, with intraday buying power now set by each broker's own risk policy rather than a blanket federal floor.
14 Apr 2026 — SEC approves the rule change eliminating the pattern-day-trader designation and its $25,000 equity minimum.
4 Jun 2026 — Change takes effect.
8 Jun 2026 — Schwab stops counting day trades against client accounts.
20 Oct 2027 — Deadline for all brokers to complete implementation. Until then, individual brokers may still apply their own limits.
Why it matters for strategy
A whole category of strategy was illegal for small accounts
This is easy to under-rate as mere paperwork. It is not. It meant an entire family of published, widely taught strategies was unavailable to the readers most likely to be reading about them.
Take the 5-minute opening range breakout, one of the most-cited intraday strategies in retail circles. It takes roughly one trade per session, entering after the first five minutes and flat by the close — about 250 day trades a year. Under the old rule, running it in a US margin account below $25,000 was not merely inadvisable. It was a violation, and the account would have been frozen inside the first fortnight.
So for decades, guidance about intraday strategies came with an unstated asterisk: this is for people who already have $25,000. Most articles never said it. The strategies were presented as universally available when, for a large share of the audience, they were not.
The part worth internalising
The constraint that made intraday strategies inaccessible to small accounts was regulatory, not economic — and it has been removed. Anyone re-evaluating an intraday strategy they dismissed years ago on capital grounds is now evaluating a genuinely different question.
What did not change
The rule was never the reason most people lost money
It would be a poor reading of this to conclude that intraday trading just became a good idea for small accounts. The pattern-day-trader rule was a barrier. Removing a barrier does not create an edge behind it.
Everything that actually kills intraday strategies is untouched. Costs still scale with turnover, and turnover is exactly what intraday strategies have most of. In our own testing, an ATR trailing-stop strategy on index futures took 58,444 trades over thirteen years and lost close to a million dollars per contract — not from being wrong about direction, but from being billed to death. The 5-minute ORB's published replication collapses from $138,639 to $4,860 once two cents a share of slippage is applied. A gap filter we added later lifts it to a borderline edge, and the evidence for that edge disappears once fills arrive two minutes late (Issue 07).
✓ You can now legally run an intraday strategy in a US margin account under $25,000.
Subject to your broker's own implementation timeline, which may run to October 2027.
✕ Trading costs got cheaper.
They did not. Cost per round trip is the single most common reason an intraday edge is imaginary.
✕ Smaller accounts became better suited to intraday trading.
Fixed per-trade costs weigh proportionally heavier on small accounts, not lighter.
✕ The strategies themselves got better.
A strategy that did not survive cost sensitivity before this rule change does not survive it now.
Before you act on this
Check what your own broker has actually implemented — the industry deadline is October 2027 and policies vary in the meantime. This applies to US margin accounts; cash accounts and non-US jurisdictions were never governed by this rule and are unaffected.
Then ask what we ask of every strategy we test, the Retail Gate: could someone with a day job, a broker and the published rules run it? If it needs paid data, an always-on computer or fills within seconds, the open door does not help you.
And the honest framing of the whole thing: a door opened. Nothing was said about what is on the other side of it.
Your turn
Send us the intraday strategy you are about to risk money on. Leave a comment or reply to any issue in your inbox. We test it and publish what we find.
Historical simulation figures cited are from our own backtests on index futures and from the published replication of the opening-range-breakout paper; they are not investment advice.
Sources: SEC rule approval April 2026, effective June 2026; broker implementation notices.