Getting started in day trading is not like dabbling in investing. Any would-be investor with a few hundred dollars can buy shares of a company and keep it for months or years. However, the Financial Industry Regulatory Authority (FINRA) sets rules for those whom it defines as pattern day traders (someone who executes four or more day trades within five business days in the same account). These rules require margin traders who trade frequently to maintain at least $25,000 in their accounts, and they cannot trade if their balance drops below that level.
This means day traders must have sufficient capital on top of the $25,000 to really make a profit. And because day trading requires focus, it is not compatible with keeping a day job.
The maximum that rules permit a pattern day trader to trade in excess of the $25,000 maintenance margin.
Most day traders should be prepared to risk their own capital. In addition to required balance minimums, prospective day traders need access to an online broker or trading platform and software to track positions, do research, and log trades. Brokerage commissions and taxes on short-term capital gains can also add up.
Aspiring day traders should factor all costs into their trading activities to determine if profitability is attainable.
IMPORTANT: Pattern day trading rules apply to stock and stock options trading, but not to other markets such as forex.