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Author Topic: Question regarding Unsettled Funds
andrewunknown
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Hey all -
I've searched quite a bit for a complete and lucid explanation about unsettled funds, but haven't come up with much. Ameritrade has info. about regulation T, which is related, but nothing speaking to my particular question. Take this scenario; how how it play out (with a cash account)?

Buy stock x on Monday, sell stock x on Tuesday. When will those funds be available to trade again? Wednesday?

It's a bit embarrassing to post such a question, and I do have an idea of the answer from experience, but wanted someone to explicitly lay out what will happen, so I don't risk missing an opportunity in the future.

TIA

Andrew Unknown

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Mini Me
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If the stock x transaction was already settled,then you can use them funds to buy another stock as soon as you sell stock x. If it wasn't settled,then you'll see the cash for the sale in your account,but it will be unavailable to be used until the transaction of the sale is settled,which is 3 business days.
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Lindy
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I ran into the same problem...this is usually the case if you daytrade more then 3 times per week...
You are then dubbed a day trader and the rules change.....if you don't day trade for 90 days once the day trading call has been made
(round trip/same day) you will have immediate funds available again as soon as you sell again...at least this is the way it works on E-trade.
It blows having to wait 3 days...I solved this problem by opening another account...and I make sure I do not exceed 3 round trips per week.
A trusted friend, wife, whatever...but sure is nice to have those funds avail!

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Lindy

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Ghosty
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To get around the 3-day settlement, just upgrade your account to a Margin account.
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JoeMillion
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Yep, margin accounts you can buy right after you sell. In cash accounts you have wait 3 days.

Joe

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sonnydbar
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Andrew, with e-trade when you sell your stock those funds are available immeadiatley to buy another stock, however if you sell that stock before the first one settled (usually 3 days) you will get hit with a 90 cash only restriction. Take my word for it I served 2 restrictions so far, one on qbid and one on cmkx and both of them were worth it. Like every one says the only way around it is two accounts or a lot of cash in the account to be able to cover yourself.

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am I part of the cure, or am I part of the disease...

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Lindy
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quote:
Originally posted by ghosty:
To get around the 3-day settlement, just upgrade your account to a Margin account.

I have a margin account with E-trade, but...when I did more then 3 round trips in one week...I got the call...I immediately stopped 1 day round trips and am now on a "partial restriction"
funds are now avail. the next day.
If I had daytraded one more time, I would have been on the 3 day...
so.... having a margin acct. did not change the fact that you cannot do more then 3 day trades in one week without being placed on some type of restriction...
At least this was my own experience...don't know
how other brokers do it.
Anyway, good luck

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Lindy

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Ghosty
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quote:
Originally posted by Lindy:
quote:
Originally posted by ghosty:
To get around the 3-day settlement, just upgrade your account to a Margin account.

I have a margin account with E-trade, but...when I did more then 3 round trips in one week...I got the call...I immediately stopped 1 day round trips and am now on a "partial restriction"
funds are now avail. the next day.
If I had daytraded one more time, I would have been on the 3 day...
so.... having a margin acct. did not change the fact that you cannot do more then 3 day trades in one week without being placed on some type of restriction...
At least this was my own experience...don't know
how other brokers do it.
Anyway, good luck

I was just saying upgrading to a margin account would eliminate the need to wait 3 days for funds to settle. You will still be flagged as a pattern day trader if you make four or more trades within 5 days I believe. According to Ameritrade:

Any margin account that executes four or more day trades/round trips within a rolling five business days has shown a pattern of day trading.

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FurrySound
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"Any margin account that executes four or more day trades/round trips within a rolling five business days has shown a pattern of day trading."

This is correct, and is only regarding 'round trips' .. ie: you buy and then sell XYZ stock on day 1 (or sell and then buy, either direction), then buy and sell ABC stock on day 2, etc... you can do 4 of those per 5 day period. Regardless if they are the same stock or different stock.

But if you buy on day 1 XYZ, and sell it on day 2, no restrictions, it's only regarding same day round trips.

Ameritrade allows you to turn on Margin even if you don't have $2k in the account, you just don't get any margin buying power, shouldn't use it anyway, until you reach $2k.

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FurrySound
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NomarKash
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Why is daytrading not allowed by ameritrade and the other discount brokers?
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Ghosty
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quote:
Originally posted by NomarKash:
Why is daytrading not allowed by ameritrade and the other discount brokers?

It's allowed, you just are only allowed to do four round-trip trades within a 5 business day period or you get labeled as a "pattern daytrader", where you need a minimum of $25,000 balance.
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NomarKash
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OK, thanks.
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Prdponce
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Only applies to margin account. Cash accounts as long as your money is settled you can do as many round trips as you wish.


quote:
Originally posted by ghosty:
quote:
Originally posted by NomarKash:
Why is daytrading not allowed by ameritrade and the other discount brokers?

It's allowed, you just are only allowed to do four round-trip trades within a 5 business day period or you get labeled as a "pattern daytrader", where you need a minimum of $25,000 balance.

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Ghosty
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quote:
Originally posted by prdponce:
Only applies to margin account. Cash accounts as long as your money is settled you can do as many round trips as you wish.


quote:
Originally posted by ghosty:
quote:
Originally posted by NomarKash:
Why is daytrading not allowed by ameritrade and the other discount brokers?

It's allowed, you just are only allowed to do four round-trip trades within a 5 business day period or you get labeled as a "pattern daytrader", where you need a minimum of $25,000 balance.

"as long as your cash is settled". This takes 3 days. It's pretty hard to "daytrade" with a cash account unless you have a significant amount of money, since any profit you made "daytrading" wont be able to be used until 3 days.
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FurrySound
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I spoke with Ameritrade in detail about the 'round trips' - slight correction to my previous post.

Their response was you can make as many as you like, the limit is 'same stock round trips' are limited to 4 every 5 days. Check with your broker.

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FurrySound
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stocktrader22
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How much money do you need in an account with ameritrade to do as many stock round trips as you want weekly, I wouldnt do more than 4 every 5 days for one particular stock.

I have a maximum of $8k I can put into an account right now, I use scottrade and was wondering how I can change from a cash account to being able to buy and sell same day and do that every day. I tried doing this without my funds settled with about 10 stocks and I was warned by Scottrade.

So with scottrade or any other brokerage which one can I do with 8k so I can buy/sell every day.

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Ghosty
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You need a margin account... with Ameritrade you just ask to be upgraded to margin capabilities.... that's if you have a current cash account... if you don't have an account yet, it's $2,000 to open a margin account with Ameritrade..
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stocktrader22
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As I have been reading though I dont understand what a 2,000 margin account will do for me instead of a cash account. I currently have a scottrade cash account and wait 3 days for it to settle.

My goal is to be able to buy and sell 1-3 stocks per day about 3-5 times a week without having to wait 3 days for my funds to settle.

I think 25k is needed in order to do that, but I hear with choice trade if I have lets says 8k I can use 2k per stock and buy 4 stocks, sell them the same day, and all those funds will be available to me before the next trading day opens.

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blueranger
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you can buy and sell right away
with the margin ameritrade.
I do it..

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