Retail investors have returned to speculative trading in April, driven by a broader rally in risk assets and a regulatory change that removes a key barrier to active trading. According to CNBC, he shift has already triggered sharp price movements in several stocks, highlighting renewed volatility across meme trades.
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SEC Rule Change Opens Access
The U.S. Securities and Exchange Commission approved a proposal by FINRA to eliminate the pattern day trader rule. The rule previously required traders to maintain at least $25,000 in their accounts if they executed four or more day trades within five business days.
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The new framework replaces that threshold with an intraday margin system, allowing traders with smaller accounts to participate more actively. FINRA said the rule had become outdated since its introduction after the dot-com crash.
Continue reading: SEC Approves Plan to Remove $25K Day Trading Limit: How Will the New Risk-Taking Approach Impact Traders?
Adam Cohn, Head of Trading Operations at TradeStation, told the publication that the update lowers barriers while maintaining safeguards. “This change opens the door for more investors with smaller accounts to trade more actively, while still keeping protections in place through modern margin and risk controls,” he said.
Analysts at JPMorgan noted that the regulatory shift could drive further growth in retail trading volumes in the coming months.
Sharp Moves Highlight Risks
Retail traders have already moved into highly volatile stocks. Allbirds shares jumped from about $2.6 to $25 after the company announced plans to pivot toward artificial intelligence infrastructure under a new brand. The stock later dropped to around $8, reversing much of the gain.
Avis Budget Group also recorded extreme price action. The stock rose from below $100 to nearly $860 before falling sharply within the same session.
The US Securities and Exchange Commission (SEC) has approved a plan to eliminate the Pattern Day Trader (PDT) rule, which currently requires traders to maintain a minimum account balance of $25,000 to engage in frequent day trading. The rule, introduced by FINRA in 2001 after the dot-com crash, was designed to limit risk exposure for retail investors by restricting those with smaller accounts to no more than four day trades within five business days.
Its removal marks a significant shift aimed at broadening access to day trading, particularly for smaller retail participants. In place of the PDT rule, regulators are introducing a new intraday margin framework that assesses risk in real time rather than by trade frequency.
Under this system, traders will need to maintain sufficient equity based on their actual market exposure, shifting the focus from “how often you trade” to “how much risk you take.”
