The end of the $25,000 day-trading barrier means small investors can now trade freely on margin

Small investors can now make more than four day trades in a five-day period regardless of account size. The US Securities and Exchange Commission (SEC) approved changes to the pattern day trading rule, removing the long-standing $25,000 minimum equity requirement. The Financial Industry Regulatory Authority (FINRA) had proposed eliminating the definition of a pattern day trader, which previously barred traders with less than $25,000 in a margin account from executing more than four day trades in five business days. The new margin standards require investors to maintain sufficient equity to cover their current trading risks, a rule that applies uniformly to all investors, not just retail traders. The change means retail brokers like Robinhood and Webull will no longer impose automatic restrictions on frequent trading for small accounts. Public feedback “overwhelmingly supported” the plan, according to SEC assistant secretary Sherry Haywood. Steve Quirk, chief brokerage officer at Robinhood Markets Inc, called the update a “significant step forward in empowering retail investors,” while Anthony Denier, group president of Webull Corp, said reforms were “long overdue.” Robinhood shares rose 5.6% in pre-market trading following the announcement, with Webull up 7.2%. Retail investors can now access day-trading flexibility previously denied to those without $25,000 in equity.