I have a brokerage link account linked to my 401k with Fidelity which allows me to trade any stocks or options without having margin which is acceptable because it is a 401K account. It does not allow shorting a stock which is also understandable because if a stock which you are short goes up, you might need more cash which you can not desposit in a 401K account. But something that I don't understand is that Fidelity does not allow me to daytrade in my account. Say, I have 50K in my account. If I buy 50K worth of stock and sell it the same day and then buy it again, I can not sell it before the payment settlement day.Usually restrictions are made to protect the trader or the brokerage house and not to irritate them. This rule is more like of irritation. Nothing can go wrong if I constantly buy and sell in my account. I have cut and pasted the rules from Fidelity website which you can read and maybe explain it to me.
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Good Faith Violation Example 1
A Cash Account with Available to Purchase Securities = $0.00
On Monday morning, you sell XYZ and net $10,000 in proceeds
On Monday afternoon, you buy ABC for $10,000
If you sell ABC before XYZ's settlement date on Thursday, you will incur a good faith violation, as the ABC would not be considered fully paid for prior to the sale
A Cash Account with Available to Purchase Securities = $10,000
On Monday morning, you buy XYZ for $10,000 On Monday mid-day, you sell $10,000 worth of XYZ Near market close on Monday, you purchase ABC for $10,000
At this point, you have not incurred a good faith violation because you have sufficient funds for your XYZ purchase
If you sell ABC before the settlement date of your purchase, you will incur a good faith violation
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Good Faith Violation Example 1
A Cash Account with Available to Purchase Securities = $0.00
On Monday morning, you sell XYZ and net $10,000 in proceeds
On Monday afternoon, you buy ABC for $10,000
If you sell ABC before XYZ's settlement date on Thursday, you will incur a good faith violation, as the ABC would not be considered fully paid for prior to the sale
A Cash Account with Available to Purchase Securities = $10,000
On Monday morning, you buy XYZ for $10,000 On Monday mid-day, you sell $10,000 worth of XYZ Near market close on Monday, you purchase ABC for $10,000
At this point, you have not incurred a good faith violation because you have sufficient funds for your XYZ purchase
If you sell ABC before the settlement date of your purchase, you will incur a good faith violation
