posted
I got the following Alert from E*TRADE, after I bought and sold a stock within 24 hours:
Because a security was sold that had not yet been paid for, this account will only be allowed to make purchases using settled funds for the next ninety days. Learn more about this restriction.
posted
Not sure I understand the full details of your situation. Did you make a free rider transaction? This a where you sold a security and your account was credited with 'unsettled funds'. Some online services will allow you to make purchases against that money but you are NOT allowed to sell them again until the original funds settled (usually about three days). If that is the case, sounds like your service is slapping you on the wrist. If this is not the case (even if it is), you might want to give E*Trade a call and get the details.
Good Luck - Phrogger
-------------------- "You cannot play them all, so pick good ones and play them well."
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quote:Originally posted by PJ: Pretty simple - all brokers have this rule.
Are you sure about this?!?!?!? I use Scottrade and didn't see anything like that.....
If so, that's some BS. I'm quiting. What is the best online broker for daytraders?
To have a daytrader account with most if not all brokers you need a minimum of 25,000 in your account. And they are right the hold on your money and not letting you buy is a sec rule as far as I know so you will get it with whomever you use. Try spliting your money into 3 groups ie 3000.00 would be 1000.00 for Monday ect. By Thursday Mondays money is clear and can be used. Your broker may lock your account for 90 days if you don't comply.
-------------------- You never really grow up you just learn how to act in public.
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posted
So right after I posted, I e-mailed Scottrade with this question. Here is their reply: "The SEC has rules regarding trading in cash accounts that would govern over all brokerage firms. The Federal Reserve Board Regulation T governs how security transactions are to be paid. The current industry settlement date for equity trades is your tra de date plus three business days.
In a cash account, if you use unsettled funds to make a new purchase, selling the new purchase prior to the settlement of the funds used to make the purchase would result in a free-riding violation. If you do wish to sell the new purchase prior to the f unds settlement date, you can avoid a free-riding violation by depositing enough funds to your account to cover the amount of the purchase.
Any violation of Regulation T will result in a free ride. There is no fee or charge for a free-riding violation. You will receive a warning letter for a first and second violation. A third violation will result in a restriction on your account. A res tricted account cannot make purchases with unsettled funds, only settled funds."
Just thought I'd share with others wondering about this...
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posted
Thanks Firebirddude, I have Scottrade and am still learning all of the rules. Their warnings pop up when you are trying to buy and at first I waited the three days and then discovered that if I did not sell the next purchase within three days I was able to trade. Glad for your info, don't want to be restricted.
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posted
So if I just bought stock ABC and have had it for like 1 month alrdy. Then i needed funds to buy stock XCV, so i sold all my shares of ABC and bought stock ABC in the same day. Is this allowed? is this what you guys mean by the restriction?
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quote:Originally posted by MtgVo: So if I just bought stock ABC and have had it for like 1 month alrdy. Then i needed funds to buy stock XCV, so i sold all my shares of ABC and bought stock ABC in the same day. Is this allowed? is this what you guys mean by the restriction?
You can sell your abc stock and buy xcv but you would not be able to resell xcv untill the money from abc settled ( 3 days) at least thats my take on it.
-------------------- You never really grow up you just learn how to act in public.
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quote:Originally posted by poorman: You can sell your abc stock and buy xcv but you would not be able to resell xcv untill the money from abc settled ( 3 days) at least thats my take on it.
posted
it is because it is a roth ira account and you cannot trade on margin, only on a cash basis. When trading with only cash, 3 days is required before using the same funds again. If you had more liquid money in your account though you could have bought something.
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posted
oh yeah and i think the money takes three days to clear from the stock being bought, not sold. so if you have had a stock for more than three days and trading on a cash account, funds should be available for trading instantly upon sale.
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posted
Time to throw a curve ball into the discussion.
I'm quite sure I've committed a free-ride using Scottrade once or twice, but they never have been recorded on my account (EDIT: Because they send you a letter of notice or something like that) -- which is odd considering after the 2nd offense they supposedly freeze you for 90 days to only using cleared funds. I've also heard that with members using a cash account w/ Choicetrade have also bought and sold however many times they want to and never seem to worry about free rides. I dunno..is it the brokerages getting lax or what?
This has just been my experience so I can only relate that.. <shrugs>
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posted
what i have found is that you dont have these problems once you have been approved for margin you should have the money as soon as the trade is made
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Ok. Made a sale earlier today. Just had my Scottrade Streamer open and placed a buy order with the funds aquired from earlier this morning. Upon pressing send, a small window opened up and warned me that I was using unsettled funds and I cannot sell until the funds have cleared. I was then given the choice of yes or no. I pressed yes and the order was RE-sent and went through as normal. Just a note for those using Scottrade atleast.
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hey everybody--new to this site--i have run into the problem of this bs rule of unsettled funds--i have found a broker who could care less how many times you trade!!!---its true this reg-t bull is set buy the fed --the only way around it is to open a margin account---that is in the USA--go to this link and check this out--i have called them and they are in jamacia mon!--any one have an acct here?--feedback would be great http://www.allianceinvestment.net/alldaytraders/index.html
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quote:Originally posted by firebirdude: Ok. Made a sale earlier today. Just had my Scottrade Streamer open and placed a buy order with the funds aquired from earlier this morning. Upon pressing send, a small window opened up and warned me that I was using unsettled funds and I cannot sell until the funds have cleared. I was then given the choice of yes or no. I pressed yes and the order was RE-sent and went through as normal. Just a note for those using Scottrade atleast.
you will only get to sell on unsettled funds twice before they have to restrict your acct.
they will warn you about buying with unsettled funds each time...scottrade is pretty good about trying to help you follow the rules
-------------------- Don't envy the happiness of those who live in a fool's paradise.
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posted
If you get labeled a daytrader with less than 25k, nothing happens, you can trade 10 times a day, just with lots of warnings and no access to margin.
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quote:Originally posted by glassman: you will only get to sell on unsettled funds twice before they have to restrict your acct.
Right. That's what they e-mailed me. Like I posted above: "You will receive a warning letter for a first and second violation. A third violation will result in a restriction on your account. A restricted account cannot make purchases with unsettled funds, only settled funds."
Well, I free rode on Friday. I didn't care. It was to walk away with 140% profit! Restrict me all you want! No real warning as of yet, but I'm sure it's coming. Keithsan?? What do you mean? I don't have 25k yet. And I have heard that if you live in Canada, this rule does not apply to you. True? Can I just sign up with Ameritrade Canada and be good to go?
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