Decreased? (If someone is trying to do day trades with $40,000 or less, then they will not be able to do too many trades since their money will be locked up during the settlement time. Is there a rule that lets day traders overcome this hurdle?)
Yes, it's called a margin account. And I don't know of any brokers that will allow you to day trade outside of one. With a margin account, you buy stocks with money you borrow from the broker (you pay interest on open margins). This way your money isn't tied up during trade settlement. Of course, you have to keep cash or stock in your account as collateral against the margin loan.
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