The Financial Industry Regulatory Authority (FINRA) is about to allow day traders in the US to participate.
Bloomberg reports that a group of “brokerages” has come together to draft a proposal that would drop the daily entry fee from $25,000 to just $2,000.
Before you quit your job and throw yourself at “The Wolf of Wall Street,” the $25,000 pattern day (PDT) rule is still in effect, but it could be voted on by the FINRA board as soon as this fall.
For publicly traded companies like Robinhood (HOOD), Webull (BULL), and Coinbase, which recently announced US-listed stocks and ETFs, this is a win. More sellers. More volume. Additional fees. With the entry bar set to drop by 92 percent, the most obvious risk is that these would-be “day traders” will lose what little they already have.
The $25,000 rule was ironically coined as a “don’t take back control” after the dot-com crash. In the late 90’s, discount and online retailers, better known as “day trading stores,” made trading stocks cheaper and easier. The House imposed rules, risk-based controls, and reduced its fees while federal agencies looked the other way. Naturally, dozens of small accounts came in and were quickly blown up in the dot-com bust. This left many traders broke, as well as leaving these traders with credit risk, due to the amount of money most of these small traders were using.
If this all sounds incredibly familiar, it is. Robinhood charges zero commissions and makes its money from paying for order flow. Coinbase offers nearly 24-hours-a-day, 5-days-a-week zero-fee trading on thousands of US stocks and ETFs, with fractional shares of $1 and instant funding, all in the same app where you can also trade volatile, extreme things like meme tokens on Solana and other blockchains. Both also offer prediction markets.
After the dust from the crash had settled, the Securities and Exchange Commission (SEC) in February 2001 issued new rules that defined a “pattern day trader” as someone who trades 4-plus days in 5 business days. They were also required to hold at least $25,000 in a margin account. If you’re stuck trading 4 days out of 5 days, they drop the hammer. Robinhood, for example, lets its users know when they are about to make that fourth day trade. Whether it’s the Dow that just hit $50,000 or the S&P 500 hitting an all-time high on Wednesday, FINRA and the SEC apparently feel it’s no longer needed.
With a reported “50 brokerages and individual investors” already submitting comments to FINRA, this proposal, if approved, could lead to a repeat of the past. Instead of a dot-com bust, however, it could be private debt, overstocked AI stocks (see Allbirds), Bitcoin and crypto, or worse, all three, leaving an entire generation of newbies, the unemployed, and the financially desperate to trade and gamble their way to life-changing riches. According to the New York Fed, recent unemployment in late 2025 (ages ~22-27 with BA+) remained around 5.6-5.8%. This is the highest it has been since 2013. Bloomberg reported in November 2025 that Americans with a four-year college degree “now comprise a record 25% of the unemployed,” more than the “1.9 million Americans age 25 and older with at least a bachelor’s degree who were unemployed in September.”
FINRA, with guidance from the SEC and clear encouragement from brokerages and individual investors, sees this historic problem young people are suffering not as a problem they can fix, but as an opportunity they can capitalize on if the “do it all in one day” entry bar is lowered.
For Robinhood – the go-to app for Gen Z and millennial investors, which recently launched a sweeping set of fintech banking updates – the PDT rule change would be a natural fit. A typical Robinhood account sits in the low to mid four figures, held by low to moderate income investors. By way of communication, etc., they want to win and get rich now. That’s the sweet spot for Robinhood and the potential FINRA rule change from $25,000 to $2,000.
And Robinhood’s core users—younger, mostly male, and with an above-average risk tolerance—will now only need about a month’s worth of money to start day trading on a platform they already know and trust. That’s more what keeps users at Robinhood and others growing their bottom line.
But what about evil?
The downside is that it’s worth the weight. Most of these new “day traders” will come in with little or no real day trading experience. Remember, they’re probably just out of college or a few years out, living on whatever income they’ve been able to pull together.
At that point, they want to get out of that hole. Add margin to the equation, and the stakes multiply because margin increases perceived purchasing power. Even modest market swings (which honestly aren’t visible today) can reveal a much bigger hole in the real account than the user realizes. The position feels small, but the loss, which is always there, is not. And if the loss is bad enough, the user owes a brokerage fee.
Our analysts recently identified a stock that has the potential to be the next Nvidia. Tell us how you invest and we’ll show you why it’s our #1 choice. Tap here.
-
Robinhood (HOOD) – It will likely see increased trading volume, new user acquisition, and higher revenue from order flow fees and other fees due to the lower barrier to entry for day trading.
-
Coinbase (COIN) – Stands to benefit from additional trading activities across its platform, including US-listed stocks, ETFs, and cryptocurrencies, operated by dozens of day traders.
-
Bull – As a retail trader, you will likely experience an increase in the number of trades and new accounts from daily traders entering the market with low capital requirements.
-
Charles Schwab (SCHW) – As a major retail company, it will attract new day trading clients and see an increase in transaction volumes, increasing its commission and fee-based income.
-
Interactive Brokers (IBKR) – A prominent brokerage catering to active traders, it is poised to benefit from an expanded pool of day traders and increased trading activity across its platforms.
-
SoFi Technologies (SOFI) – As a fintech company that provides retail services, it can see an increase in user engagement and trading volume from new day traders.
-
Sales brokerages – The industry will experience a significant increase in trading volume, new account opening, and revenue streams from order flow fees, margin interest, and other fees.
-
Fintech – Companies that provide trading platforms, financial instruments, and related services will see increased adoption and use as more people engage in daily trading.
-
All the Birds (TONI) – Although it is mentioned as a possible target for speculative trading, the change in the law does not directly affect its business performance or financial performance, only the possible volatility of the stock price.
-
AI Shares – The regulatory change may increase speculative trading in the sector, but it does not directly affect the underlying business performance or long-term growth prospects of AI companies.
-
Private Credit — The article talks about private credit as a bubble that could be made worse by speculative money, but the change in law does not directly affect the structure or demand within the private credit market itself.
-
In the US – The country may see an increase in financial activity and tax revenue from trade, but this balances the potential for widespread investor losses and increased market volatility.
-
Bitcoin and Crypto – Although the change in law mainly affects stock trading, it can fuel indirect speculation interest and volatility in crypto assets, leading to mixed results for investors.
-
Retail Investors (US) – A large proportion of new day traders, especially those with limited capital and little experience, are at high risk of experiencing large financial losses, which may lead to personal financial stress.
-
Rapid Increase in Sales Accounts and Volume – The reduction of the PDT limit from $25,000 to $2,000 will immediately stimulate a large influx of new, low-income traders into the market, leading to a rapid increase in the opening of trader accounts and daily trading volumes. Confidence: Up.
-
Intertemporal Fluctuations in Specified Assets – With a large number of inexperienced traders and low barriers to entry, highly speculative assets such as meme stocks, certain AI-related stocks, and potential cryptocurrencies may experience high price volatility and rapid, often irrational, price swings. Confidence: Up.
-
Significant Medium-Term Financial Losses and Financial Stress – A large number of new day traders, who are inexperienced and often use margin, will inevitably lose a lot of money, leading to financial difficulties and possible debts. Confidence: Up.
-
Review of Long Term Rules and Possible Changes to Rules – Widespread investor losses and market volatility may result in increased scrutiny from FINRA, the SEC, and Congress, which may lead to new regulations or changes to the PDT rule in the future. Confidence: Average.
-
Additional Long-Term Credit Risk for Retail Brokerages – As inexperienced traders use margin and incur losses, the risk of irrecoverable debts of retail brokerages may increase, potentially impacting their balance sheets and requiring strict risk management. Confidence: Average.
↑ Retail Sales Volume – A lower PDT threshold will directly lead to a significant increase in the number of retail transactions performed on a daily basis.
↑ VIX — Increased speculative activity and potential market volatility from an outbreak of inexperienced traders may increase market volatility.
↓ Consumer Confidence (among young adults) — Widespread financial losses among young, inexperienced traders may have a negative impact on their overall economic situation.
↑ Brokerage Income (from PFOF/Margin Interest) — Retailers will see a direct increase in income from additional order flow fees and margin loan interest.
→ US Household Debt — While some may profit, the cumulative effect of widespread losses, especially on margin, may contribute to a slight increase in the household debt of affected individuals.
One stock. Nvidia-grade power. 30M+ investors hope Moby gets it first. Get a choice. Tap here.
