Question on Availability of Funds from Sale of Stocks

GrowleyMonster

GrowleyMonster

A guy on my ship was saying he tried to buy stock with money from stock he had just sold and was told it would be a couple of days before the funds were available for buy orders. Didn't ring true to me, unless it was a broker that only caters to investors and not traders. Being a newbie I didn't want to call BS or try to explain why I thought I would never have this problem even if he did.

Lets say I am daytrading stocks and have a $25k account, and I have four positions open and most of my money in play, nothing on margin. I scan a sweet bottom reversal setup and I am ready to exit one long position and need the money from that trade to buy in on the new setup. Is this money immediately available for trading after the sale? I was under the impression that with a direct access brokerage that it was. Educate me! (please, thank you)
 
GrowleyMonster said:
A guy on my ship was saying he tried to buy stock with money from stock he had just sold and was told it would be a couple of days before the funds were available for buy orders. Didn't ring true to me, unless it was a broker that only caters to investors and not traders. Being a newbie I didn't want to call BS or try to explain why I thought I would never have this problem even if he did.

Lets say I am daytrading stocks and have a $25k account, and I have four positions open and most of my money in play, nothing on margin. I scan a sweet bottom reversal setup and I am ready to exit one long position and need the money from that trade to buy in on the new setup. Is this money immediately available for trading after the sale? I was under the impression that with a direct access brokerage that it was. Educate me! (please, thank you)
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Non sense... It's available right away, wait couple of days ? Wires take 2 days tops, in account it's instant
 
So there is a big difference between a margin account and a cash account. Why would you want to open a cash account instead of a margin account? After all, you don't HAVE to trade on margin simply because you can, right? Would this be due to poor credit or bad history with the brokerage holding the account?
 
Not everyone qualifies for a margin account.
Some brokers do not offer margin accounts to IRAs-so they have to use CASH.
If you want to day trade, but have an account under $25,000, there is no PDT rule for a cash account, you just have to wait for the trades to settle. Some with account of $20,000, choose CASH and trade options. They settle next day.
 
Robert Morse said:
Not everyone qualifies for a margin account.
Some brokers do not offer margin accounts to IRAs-so they have to use CASH.
If you want to day trade, but have an account under $25,000, there is no PDT rule for a cash account, you just have to wait for the trades to settle. Some with account of $20,000, choose CASH and trade options. They settle next day.
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That's interesting. Thanks again!
 
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