How to open a day trading account at Fidelity
Fidelity lets you open a day trading account through their website or by phone, but the process differs from a standard brokerage account because day trading has specific regulatory requirements. You will need to meet the Financial Industry Regulatory Authority (FINRA) minimum of $25,000 in account equity before you can place day trades, and Fidelity will ask you to confirm you understand the rules around pattern day trading before your account is active for that purpose.
The steps are: create or log into your Fidelity account, navigate to the account settings or contact a Fidelity representative, request to change your account type to a margin account (required for day trading), and confirm you meet the $25,000 minimum. Fidelity will verify your funds are in the account before enabling day trading privileges. The entire process typically takes one business day once your account is funded.
Key Takeaways
- You must have at least $25,000 in account equity before Fidelity will allow day trading, and this amount must be maintained at all times.
- Day trading accounts at Fidelity must be margin accounts, which means you are borrowing money from Fidelity to trade and paying interest on that borrowed amount.
- FINRA rules limit you to three day trades in a rolling five-business-day period unless your account stays above $25,000, so understanding this rule before you trade is essential.
- Fidelity will ask you to acknowledge that you understand pattern day trader rules and the risks of margin trading before enabling day trading on your account.
What a margin account is and why day trading requires one
A margin account allows you to borrow money from Fidelity to buy securities. A standard cash account does not; you can only trade with money you have already deposited. Day trading typically requires a margin account because day traders often need to execute multiple trades in a single day and may not have enough cash on hand to settle each trade before the next one begins.
When you use margin, Fidelity charges you interest on the borrowed amount. The interest rate varies based on the size of your loan and current market conditions, but Fidelity publishes its margin rates on their website. If your account value drops below the $25,000 minimum, Fidelity can issue a margin call, requiring you to deposit more money or sell positions to bring the account back above the threshold.
The $25,000 minimum and what happens if you fall below it
FINRA requires that any account designated for day trading maintain a minimum of $25,000 in equity at all times. This $25,000 is measured at the end of each business day. The amount includes cash, stocks, bonds, and other securities in your account, all valued at their current market price.
If your account equity drops below $25,000, Fidelity will restrict your day trading privileges until you deposit enough money to bring the account back above the minimum. You can still hold positions and trade, but you cannot place new day trades. The restriction lifts once your account equity returns to $25,000 or above. If you fall below the minimum repeatedly, Fidelity may require you to wait a set period before day trading privileges are restored.
Pattern day trader rules and the three-trade limit
FINRA defines a pattern day trader as anyone who executes four or more day trades in a rolling five-business-day period. Once you are flagged as a pattern day trader, the three-trade limit applies: you can place no more than three day trades in any five-business-day window. A day trade is buying and selling the same security on the same day.
If you exceed the three-trade limit, Fidelity will restrict your account from placing new day trades for 90 days. The restriction can be lifted early if your account equity rises above $25,000 and stays there, but the safest approach is to track your day trades carefully. Fidelity's platform shows you how many day trades you have used in the current five-day window, so you can monitor your activity before placing a trade that would exceed the limit.
How to request day trading privileges on an existing Fidelity account
If you already have a Fidelity account but it is not set up for day trading, you can request the change online or by phone. Log into your account, go to Account Settings, and look for the option to change your account type or request margin privileges. Fidelity will show you the terms of a margin account and ask you to confirm you understand the interest charges and risks.
You will also be asked to acknowledge the pattern day trader rules and confirm that your account meets the $25,000 minimum. Once you confirm, Fidelity will enable day trading on your account, usually within one business day. If you prefer to speak with someone, you can call Fidelity's customer service line and ask to upgrade your account to a margin account with day trading privileges.
Margin interest rates and borrowing costs
Fidelity charges interest on the amount of money you borrow through margin. The rate depends on how much you borrow and the current interest rate environment. Fidelity publishes tiered rates on their website; larger balances typically receive lower rates. For example, borrowing $5,000 may carry a different rate than borrowing $50,000.
Interest accrues daily and is deducted from your account monthly. If you hold a position overnight using borrowed money, you will pay interest for that day. Day traders who close positions the same day they open them still pay interest if the position was open at the end of the trading day. Understanding these costs before you trade is important, because interest charges reduce your profit on each trade.
Account types and alternatives if day trading is not right for you
If you do not want to day trade but want to trade stocks at Fidelity, a standard cash account works fine. You can buy and sell securities using only the money you have deposited, with no interest charges and no $25,000 minimum. Trades settle in two business days, meaning the money from a sale is not available to buy again until two days later.
Fidelity also offers retirement accounts like IRAs and 401(k)s, which have different rules and tax treatment. Day trading is not prohibited in these accounts, but the $25,000 minimum and margin rules still explore if you want to day trade within them. Many traders use a combination of account types: a margin account for day trading and a retirement account for longer-term holdings.
Frequently Asked Questions
Can I day trade with less than $25,000 at Fidelity?
No. FINRA requires $25,000 in account equity to day trade, and Fidelity enforces this rule. If your account is below $25,000, Fidelity will not allow you to place day trades, even if you have enough cash to cover a single trade. You must deposit money to reach the $25,000 threshold before day trading privileges are enabled.
What counts toward the $25,000 minimum?
Cash, stocks, bonds, mutual funds, and other securities in your account all count toward the $25,000 minimum. The value is calculated at the end of each business day using the current market price of each holding. Unsettled trades (trades that have not yet settled) do not count until settlement is complete.
If I close all my positions, do I still need $25,000 to day trade?
Yes. The $25,000 minimum applies whether you hold positions or not. If you close all your trades and your account drops below $25,000 in cash, your day trading privileges will be restricted until you deposit more money or the account value returns to $25,000.
Can I day trade in a retirement account at Fidelity?
Yes, but the same rules explore: you need $25,000 in the account, it must be a margin account, and the pattern day trader rules still limit you to three trades per five-business-day period. Some retirement accounts have additional restrictions, so check with Fidelity about your specific account type before you begin day trading.
What happens if I exceed the three-trade limit?
Fidelity will restrict your account from placing new day trades for 90 days. The restriction is automatic and applies to your entire account. You can still hold positions and trade, but you cannot open new day trades until the 90-day period ends or your account equity rises above $25,000 and stays there for the restriction period.