When you buy and then sell the same stock or ETF instrument within a single trading day, you’ve made a day trade.
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Understanding the rule
You’ll be considered a pattern day trader if you execute 4 or more day trades within 5 trading days.
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You’re generally limited to no more than 3 day trades in a 5 trading day period, unless you have at least $25,000 of portfolio value in your account at the end of the previous day. This sounds tricky, but it just means that within any 5 trading day period, once you place your fourth day trade you will be flagged as a pattern day trader and you’ll need to have a portfolio value greater than $25,000 at the end of the trading day to be able to continue day trading the next day.
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If you intend to day trade and do so often, it's recommended that you maintain a total balance in your account of at least $25,000. Raseed is implementing a protection to prevent your account from getting restricted by limiting day trades to maximum of 3 trades over a rolling 5 business day period.
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To help understand this a bit better, if you buy AAPL and sell it on the same day, it is a day trade. If you buy and sell AAPL and buy and sell TSLA on the same day, that is 2 day trades. If you buy AAPL on Monday and sell it on Tuesday, that is not a day trade, because you did not trade it on the same day. Also, if you bought and sold AAPL on Monday and bought and sold TSLA on Tuesday, that is a total of 2 day trades in 2 days. The day trade count will start re-setting after 5 days (assuming you do no more day trades in any subsequent days).
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