Question: I'm searching into the regulations on day trading stocks imposed by SEC, what are they exactly?

I can't seem to understand the part where it says "The trader's overall trading activity exceeds 6 percent of the total trading activity for the five-day period under consideration." It says if I do this I'm a pattern day trader. The problem is I don't know how to apply this. Is a "trade" a single buy or sell of a security? Is 6% of the number of trades or dollars or stocks or what? Looking into ETF options trading but I can't afford to start with $25,000 so I need to make sure I will not be classified as a "day trader". If someone knows anything about this please chime in

Answer:

The four or more trades they're referring to is round-trip trades (meaning both a buy and sell)... So you're basically permitted to do 3 day-trades per business week, and you won't be labeled as a pattern day trader.

The 6% is total trading activity... This is not applicable to you... It's for people who may have a lot of long-term activity going on and and, say, day trading is 6 or less percent of those trades.

If you cannot afford $25,000.00 investment (and you'll need a little more as a buffer, 'cause if you dropped to $24,900.00 you'd be back in the non-day-trader privilege category), you only need to worry about exceeding 3 ROUND-TRIP trades (buy and sell)... You can actually avoid this completely by holding the security over night, however. So, for example, if right before market-close today you thought a stock would go up tomorrow, you could purchase it right before close and sell it the next morning — this would not count towards pattern day-trading.

Pattern Day Trading Rule is what you're concerned with. If you have less than 25K in your account... you'll quickly have a problem. The 6% rule has nothing to do with Pattern Day Trading.

Wouldn't it be smarter to start with something less difficult than day trading? Do Swing Trading, it's virtually the same skills needed but the failure rate is not as high as Day Trading. Only 90% of Swing Traders fail vs. the worst stats for day traders. Both Day Trading and Swing Trading take (on average) 3-5 years to learn.

Hopefully you have a margin account to avoid settlement issues.