posted
Okay need some help, I am not sure if I will be free riding tomorrow if I sell in a cash account.
Here it goes:
bought rwrd $4,780 on 1/28/05 (I had $4850 in the cash account) sold rwrd on 2/1/05 and it settles on 2/4/05 (now have like $3,043 in cash) bought DDSI $3009 on 2/2/05 wired in on 2/3/05 $4,000 in order to sell DDSI later that day sold DDSI 2/3 and it settles on 2/8 (now have like $2,492+$4000 from the wire) bought VNTN 2/4/05 $1816 worth
My scottrade account says cash/settled funds $2209.52 and it says unsettled funds $2,466.76 with a approximate liquidation value of $6,806 (includes my current holding of VNTN)
So I want to sell VNTN tomorrow, can I do it without free trade regulation?
Thanks in advance for all of your help!
-------------------- Disclaimer: Not accountable for anything I say Posts: 6266 | Registered: Jun 2004
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posted
You can sell without any problems. The problem has nothing to do with a sell. It is when it will allow you to repurchase the next stock and when it is settled or not. But you can sell at anytime.
-------------------- Invest with your brain not with your heart. Posts: 4405 | From: Bristol, Tn, USA | Registered: Aug 2004
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posted
Ric that is not what I heard, I called up my broker before selling DDSI, he said since it is a cash account and rwrd does not settle until 2/4/05 I can buy any stock before the settlement date but can not sell it before unless I deposited some cash before hand to pay for the unsettled trade.
-------------------- Disclaimer: Not accountable for anything I say Posts: 6266 | Registered: Jun 2004
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posted
I don''t use Scottstrade but if they do that you need to get rid of them. What would happen if a stock started tanking on you. I have never heard of that. You may want to call them back and have them qualify that answer. But I would never use a broker that did that to me.
-------------------- Invest with your brain not with your heart. Posts: 4405 | From: Bristol, Tn, USA | Registered: Aug 2004
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You begin the day with a cash position of $10,000 on Monday 05/01/XX. The first thing you do is a buy of 1000 (ABC) stocks for $10,000 Then you sell those securities on the same day generating $10,100.00, which settles on 05/04/XX, and use the money to buy 1100 (XYZ) shares for $10,100.00, again on 05/01/XX. If you hold the 1100 (XYZ) shares until Thursday 05/04/XX, you can then sell those 1100 (XYZ) shares whenever you want without having to bring in any additional funds. If you sell those 1100 (XYZ) shares before Thursday 05/04/XX, then the 05/01/XX sell of 1000 (ABC) would not have settled yet and you could not use those proceeds to pay for the 05/01/XX purchase of 1100 (XYZ) shares. In this case you would need to bring in additional money to pay for that purchase.
-------------------- Disclaimer: Not accountable for anything I say Posts: 6266 | Registered: Jun 2004
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posted
Thats exactly right. You can sell it but its unsettled funds now. The funds won't be available until its settled to purchase your next stock. So you can sell just not repurchase until account is settled without additional funds being deposited.
-------------------- Invest with your brain not with your heart. Posts: 4405 | From: Bristol, Tn, USA | Registered: Aug 2004
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posted
the only way u get a free ride violation is if u sell a stock bought with unsettled funds befor the funds have settled
Posts: 307 | Registered: Sep 2004
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posted
it is a confusing issue, but - i agree with ghostrader: the key is - you can't sell a stock bought with unsettled funds before the funds have settled.
there's no issue to *buy* whatever you want with unsettled funds, it's only a restriction on selling, or at least that's my understanding of it.
Posts: 1698 | Registered: Mar 2004
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posted
I mean the DDSI sell did not settle yet and will on 2/8/05, and then I used $1800 to buy VNTN but have $2000 in settled cash, so if I sell VNTN tomorrow shouldnt that $2000 in cash pay for the purchase of VNTN?
-------------------- Disclaimer: Not accountable for anything I say Posts: 6266 | Registered: Jun 2004
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posted
hmm, interesting - good question. if you did *not* add in the 4k cash, then you clearly could not sell without creating a free ride violation.
but - honestly i don't know if adding in the extra cash "covers" you, so that it'd now be officially ok to sell VNTN tomorrow. my suspicion is - yes and that you're ok, but - not 100% sure. sorry; have never had this come up before, because i always only add cash only one day a year, to all my accounts.
however, in rereading your scottrade quote from above, the key sentence seems to be: "In this case you would need to bring in additional money to pay for that purchase." so, it would seem that you're OK to sell tomorrow thanks to adding the extra cash, based on this at least.
Posts: 1698 | Registered: Mar 2004
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posted
I do think that actually a free ride violation caution comes up when using scottrades streamer to sell a stock when that may occur, but I just put in a sell order doing that and didnt get a warning. I think I am okay. Already had 1 violation, and I think scottrade freezes the account on the 2nd.
-------------------- Disclaimer: Not accountable for anything I say Posts: 6266 | Registered: Jun 2004
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posted
I don't understand the "unsettled funds" issue. I use ETrade, and maintain 20k in cash.....I have NEVER had an issue with unsettled funds, even when I have depleted it, (on stock holdings), sold, and had the funds instantly available...(you paid instantly, your funds should be instantly available after a sale....electronic trading)...is this just a scottrade issue, or am I missing something? can someone explain in detail? Thanks...
-------------------- Marty When I was born, I was granted a visitors pass to earth. I will enjoy everyday until it has expired. You should too ;) Posts: 1740 | From: NJ, USA | Registered: Oct 2004
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posted
Im not sure, I just am wondering If I will be okay, scottrade people when I called last time couldnt even help me.
Basically I am worried, because I bought DDSI for $3,000 and had $4,000 wired, meaning Id have $1,000 cash that is settled. Now I bought VNTN for $1800 and want to sell tomorrow. The $1,000 wont cover the $1800 purchase if I sell tomorrow, but I think the settlement of RWRD made my settled cash to $2,200, so I think I have the funds to cover a sell of VNTN tomorrow, otherwise it would be a free ride since I bought and sold a stock before the previous stock that was sold settled.
-------------------- Disclaimer: Not accountable for anything I say Posts: 6266 | Registered: Jun 2004
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posted
stocktrader22, I just don't get the settled funds thing....it was instant cash in, should be instant cash out..(on the buy(s)/sell(s))...that's what I don't get...I can see a couple of hours after close of trading day to "settle funds", but I just don't get the multi day BS....sounds like a free ride, on your money, for scottrade....I hope someone chimes in with an answer.....GL BTW....
-------------------- Marty When I was born, I was granted a visitors pass to earth. I will enjoy everyday until it has expired. You should too ;) Posts: 1740 | From: NJ, USA | Registered: Oct 2004
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posted
BTW, I've daytraded NASDAQ and DOW stocks too, and never ran across this issue......I'm very courious now....please advise....thanks...
-------------------- Marty When I was born, I was granted a visitors pass to earth. I will enjoy everyday until it has expired. You should too ;) Posts: 1740 | From: NJ, USA | Registered: Oct 2004
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posted
Worse case is my account gets freezed right? Can I appeal it, work out something with my local scottrade to bring in money to settle it? When its freezed can I do any trading, and if so how is it different than before?
-------------------- Disclaimer: Not accountable for anything I say Posts: 6266 | Registered: Jun 2004
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posted
wish I had the answers for you stocktrader22....I'm hoping someone chimes in...GL
-------------------- Marty When I was born, I was granted a visitors pass to earth. I will enjoy everyday until it has expired. You should too ;) Posts: 1740 | From: NJ, USA | Registered: Oct 2004
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posted
yea it kind of sucks because of how confusing they make it, but the way I understand it is this, I brought in $4000 to pay for the purchase and sell of DDSI (purchased $3009 worth). Now I feel like since I bought and will sell before DDSI settles, I need to have $1800 (how much I used on VNTN) to pay for the VNTN sell, which I have $2000 of settled cash, so shouldnt I be alright?
-------------------- Disclaimer: Not accountable for anything I say Posts: 6266 | Registered: Jun 2004
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posted
I'm kinda' courious if the transferred monies are the issue on "unsettled"....wish someone who was more experienced with scottrade and this issue, would chime in to help...I'm sorry stocktrader22, I just don't have answers for you at the moment...GL, but I'm so courious, I'm gunna' do some DD on this issue
-------------------- Marty When I was born, I was granted a visitors pass to earth. I will enjoy everyday until it has expired. You should too ;) Posts: 1740 | From: NJ, USA | Registered: Oct 2004
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My take on this, they are using yours as margin vs cash..for their bank...but what do I know.....still looking....
-------------------- Marty When I was born, I was granted a visitors pass to earth. I will enjoy everyday until it has expired. You should too ;) Posts: 1740 | From: NJ, USA | Registered: Oct 2004
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and change to group search.....you'll get alot of answers....GL
-------------------- Marty When I was born, I was granted a visitors pass to earth. I will enjoy everyday until it has expired. You should too ;) Posts: 1740 | From: NJ, USA | Registered: Oct 2004
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posted
Marty, my guess would be the reason you've never had an issue with free ride stuff is because you keep $20K cash in your account all the time. my understanding is the free ride only kicks in when you use up all your funds buying a stock (or stocks), sell it, quickly buy something new, and then try to sell the 2nd stock before the first one you sold has settled. is a little confusing though, and i admit i'm not 100% positive.
Posts: 1698 | Registered: Mar 2004
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posted
Some advice to you stock22, sounds like you have been trading like I was when I started out. I lost 40k that year! NEVER NEVER chase a stock ..You are trading pennnies and most who are also Buying/Selling are daytraders. Iknow you have been trying to learn about making money and probably have seen these stocks go up 50- 200% in hours...yes hours. You see it going up...but its already up at least 30 - 40% ..you feel like your going to miss the big one...you must look away from that stock because it has I'd say a 90% chance in dropping back to where it started or even lower. GREED GETS ALL OF US IN TROUBLE...there will always be another stock to jump in on before it is up 50%....Repeat always another stock to make money on ...often the same day.
I may be wrong about you but from what your stated losses and impatience you have that millionaire by 23 attitude....Make that 4000.00 wire the last for a while unless you are going to invest long term...QBID is in MY OPINION a great buy right now...just some patience. Just anther tip try not to put all your money in one stock because you figure you'll make twice as much . I know its exciting daytading and watching your portfolio skyrocket in an hour ...its also very addicting...I think worse than gambling..you just have to go to your comp. I know you probably won't be able to do it...but try to just papertrade this week and see how you do...hardest thing to control is a buy when its going up 5-10% a minute.The other is to sell when you think it'll go up more.
ITS BETTER TO LEARN FROM OTHER PEOPLE'S MISTAKES.. THAN TO LEARN THE HARD WAY ON YOUR OWN!
Good Luck, Mike
-------------------- EVERY Day ABOVE GROUND is a GREAT DAY!!! Posts: 2086 | From: Long Island New York | Registered: Aug 2004
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I have been doing this for 2 years now, not always chasing, mostly position playing and have bad luck just recently, my portfolio consistently chnages between $2500-$10000 not including the $4k wire which I will be taking out soon, since I do not like to play that much. At this point though if anyone had some advice on my situation with scottrade that would really help. Thanks
-------------------- Disclaimer: Not accountable for anything I say Posts: 6266 | Registered: Jun 2004
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