Cash Account Questions

H

Hugo Askin

I believe you can only use settled cash when trading cash accounts.

Say you have a $50,000 account:

1) Can you buy $30,000 of stock then sell stock the same day (Break even) - then buy $30,000 of stock later in the day? (Ie can you do unlimited "day trades" etc etc)

2) Since options settle T+1 (vs stock T+2) - can you day trade both options and stock an unlimited amount of times as well?

For example: same account size: You buy $30,000 worth of options - then sell them the same day (day trade) and then buy $30 K worth of stock and sell later (etc etc)

thank you
 
#1- No, not in a cash account. Once you buy $30,000 in stock or Options, you have only $20,000 left that day. If you close the stock or options you bought that day, you get back your Bp from stock trades in 2 days and 1 day for options.
#2-no.

If you want the ability for your BP to recycle from day trades, trade that BP an unlimited number of times, you need a margin account over $25,000. Cash accounts does not provide that.
 
Regarding Cash Account see also these postings:

https://www.elitetrader.com/et/thre...y-to-cash-accounts.368400/page-5#post-5640814
https://www.elitetrader.com/et/threads/the-put-sellers-journal.368445/page-4#post-5640670
https://www.elitetrader.com/et/threads/the-put-sellers-journal.368445/page-4#post-5640460
accounts.368400/page-5#post-5640814

And also search for further postings containing "CashAcct", "cash account", "cash acct" by earth_imperator, vanzandt, "Illini Trader", and others.

Daytrading in a cash account is possible, see above links.
 
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Hugo Askin said:
I believe you can only use settled cash when trading cash accounts.

Say you have a $50,000 account:

1) Can you buy $30,000 of stock then sell stock the same day (Break even) - then buy $30,000 of stock later in the day? (Ie can you do unlimited "day trades" etc etc)

2) Since options settle T+1 (vs stock T+2) - can you day trade both options and stock an unlimited amount of times as well?

For example: same account size: You buy $30,000 worth of options - then sell them the same day (day trade) and then buy $30 K worth of stock and sell later (etc etc)

thank you
More...

1) I think yes, you can do it! But then can't close it a second time on the same day. See also below.

2) You can use the same cash only for 1 daytrade, then you need to wait T+1 or T+2 days till it settles.

Ie. unlimited daytrades is not possible. You can daytrade the same amount only once per day. But you can open a position a second time using the same cash. See below.

Important: the testing for settled funds is done only when opening a position, not when closing!
It means you can use "unsettled cash" immediately for a new trade, but then you cannot close that position on the same day. Though you can do it, but then you will have violated a trading rule... (see the 3rd link above and the external links therein)

But if you split your settled cash to say 10 parts, then you can do 10 daytrades (ie. 10 openings and closes) + 10 new openings, all on the same day.
 
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Robert Morse said:
#1- No, not in a cash account. Once you buy $30,000 in stock or Options, you have only $20,000 left that day. If you close the stock or options you bought that day, you get back your Bp from stock trades in 2 days and 1 day for options.
More...
i would think with all the advancements in technology, they could improve the settlement time. taking 2 days in this day and age of electronic everything where you can send money around the world instantly well this settlement time doesn't really make any sense. i guess someone is making money on interest for those 2 days and maybe that's why they don't want it to change.
 
I agree. I expect there will be a move to 1 day equity settlement in the "near" future. Using block chain technology, there is the potential for same day settlement. You would have to work out how stock loan would work in the future with less time to work their magic.

rbigsby said:
i would think with all the advancements in technology, they could improve the settlement time. taking 2 days in this day and age of electronic everything where you can send money around the world instantly well this settlement time doesn't really make any sense. i guess someone is making money on interest for those 2 days and maybe that's why they don't want it to change.
More...
 
Hugo Askin said:
I believe you can only use settled cash when trading cash accounts.

Say you have a $50,000 account:

1) Can you buy $30,000 of stock then sell stock the same day (Break even) - then buy $30,000 of stock later in the day? (Ie can you do unlimited "day trades" etc etc)

2)

For example: same account size: You buy $30,000 worth of options - then sell them the same day (day trade)

thank you
More...
%%
1/NO unless you put about $10, 777 extra in you account the same day
2\Yes if you put about $11,777 extra in you options account the same day; but i would not do that =almost a sure blow UP.
[ I probably should not tell you this, because its really too risky even with cash ETFs\
but if you are good customer with cash account ,say your SCHW broker loves you because you use market orders on ETFs exits some.
You can violate it once maybe 2 x most likely+ for a good customer they can give you a warning before they shut your account down for 90 day if i remember right.]
Robert Morris had some good points;
Dave Ramsey said put 15% of your salary or business earnings in , per year/ so that's another way to do a better cash account..................................................................................
 
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