For those of you with a cash account
(Like me)

Apparently, there's something called a "good faith" trade. Let's say you have $2500 in your account and you recently bought a several shares of a stock for - let's say 2400 dollars - and you've already sold those shares. Let's say you sold for 3 grand on your trade. So, now you should have 3100 dollars in your account, right? 

2500-2400+3000= 3100

But, you only actually have 100 dollars until your funds settle.
2500 - 2400 = 100

What are funds settling? Well, when we buy and sell it looks automatic to us. (Usually- hopefully - if the volume is there.) We click buy, it says order filled. We click sell, it says order filled. 

Well, that just means that our order has been noted and earmarked. There hasn't actually been any transfer of funds from our broker to the market maker. If you've ever done a bank to bank ACH or ETF transfer, you know that it takes a frustrating couple of days.  So, too, does the organization of funds between brokers and market makers take time. 

Basically, when you buy, your broker freezes the funds that you've used. When you sell, the transaction is complete. If your broker owes the market maker money on your behalf, they initiate the ACH (or however they do it) and if the market maker owes your broker money on your behalf (the ideal situation), it takes time for the money maker to get that money to your broker to put it in your account. 

So, you are owed that money ($3000 in the example above) but you don't actually have that money. Now, your broker knows that you have that money coming and will basically lend you that money in order to make a purchase. They are lending you the money in good faith. 

But this loan is conditional. They don't want people rampantly running around and borrowing their money to lose it and then they have to pay out of their pocket and take their money back from you when it gets into your account - then have to explain to you why your money is missing or never arrived - and they have this huge accounting headache because they loaned money to someone who thought they had money and maybe made a bad trade, etc. 

So, they made a rule called The Good Faith Trade. If your funds are not settled, you may borrow against what you have coming in, but if you sell that equity before your funds are settled, you are not allowed to trade for 90 days.

So, it is important that if you are not intending to hold a stock until your funds settle (usually 2 business days), that you do not buy a stock you can't afford with the funds already settled in your account. ($100 in the example above). 

Put another way, unless you intend to hold a stock until your funds settle, you should only buy stocks that you can afford with the settled funds in your account.