Day Trade Buying Power

Day Trade Buying Power (DTBP) is the amount of money you have available in your account to place trades on a given trading day, and it only applies to margin accounts classified as Pattern Day Trading accounts with $25,000 or more in equity. DTBP is calculated by multiplying the beginning of daymaintenance excess by four.

Margin rules for DTBP are industry-wide and are established by the Financial Industry Regulatory Authority (FINRA).

How DTBP Works

Your DTBP may fluctuate based on trades you place during a given trading day, but any deposits and sales of overnight holdings will not impact your DTBP until the following day.

For example, if you start the day with $1,000 DTBP and sell a position you held overnight for $5,000, your DTBP will still be $1,000. The $5,000 sale will be credited to your DTBP the following trading day.

Beginning of Day DTBP: $1,000

Impact to DTBP: $0

Actions: Sell $5,000 fully marginable positions held overnight

Current DTBP: $1,000

Impact to DTBP: $0

Next Day's DTBP*: $7,000

*Next Day's DTBP assumes you have made no other transactions and the market closed flat compared to the prior day. It was calculated as follows: $250 maintenance excess from previous day ($250 x 4 = $1,000); $1,500 released to maintenance excess after sale ($5,000 x 30% = $1,500); next day's DTBP = ($250 + $1,500) x 4 = $7,000.

Likewise, if you begin the day with $1,000 and make a $5,000 deposit, the $5,000 will generally be included in the DTBP calculation the next day.

However, if you buy a lot of stock during a given trading day and sell the entire lot the same day (a day trade), the proceeds from the sale will credit to your DTBP accordingly. In other words, the net impact to DTBP will be $0 following the sale.

DTBP Impact refers to the net value of the trades you place in a given trading day and the amount by which they raise or lower your DTBP. For more information about interpreting your account balances, visit Day Trading Margin Account Balances.

For example, say you begin the day with $1,000 DTBP with $0 Impact. You purchase $1,000 worth of marginable stock and then sell it. Your DTBP for the day would be:

Beginning of Day DTBP: $1,000

Action: Buy $1,000 marginable stock

Impact to DTBP: $1,000

Current DTBP: $0

Action: Sell $1,000 marginable stock

Impact to DTBP: $0

Current DTBP: $1,000

Trading Within Your DTBP

If your account is eligible for DTBP, then any trades placed in a given trading day must be within your DTBP. For example, in the situation described above where you begin the day with $1,000 and then deposit $5,000, your trading would need to stay within your $1,000 DTBP until the deposit is applied.

When you attempt to make a stock purchase that exceeds your DTBP, you will see the following message: 'Order Rejected due to insufficient day trade buying power. Your available day trade buying power to purchase this security is $X.XX. For further details regarding trading with day trade buying power, visit Knowledge Center (search topic: day trade buying power).'

When you attempt to make a leveraged ETF purchase that exceeds your DTBP for that ETF, you will see the following message: 'Order Rejected due to insufficient Day Trading Buying Power. You are placing an order for a leveraged ETF which has higher maintenance requirements. Your available day trading buying power to purchase this security is $X.XX. For more information regarding maintenance requirements for leveraged ETFs, please visit the Knowledge Center Help Topic: ETF maintenance.'

If you have questions about Day Trade Buying Power, contact your local branch office.

Margin trading involves interest charges and risks, including the potential to lose more than deposited or the need to deposit additional collateral in a falling market. Scottrade's margin agreement, available at scottrade.com or through a Scottrade branch office, contains the Margin Disclosure Statement and information on our lending policies, interest charges and the risks associated with margin accounts.