How does PDT work with cash only accounts? I've looked online and can't seem to find a definitive answer as to how this works. Some say that there is still a 3x trading rule within 5 sliding days while other sources say that there is no restriction as long as you don't free ride stocks.
Does anyone have a potential answer to this?
Posted Nov 27, 17 9:07 PMbyothealpha
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Basics
PDT doesn't exist for cash accounts, only margin accounts. However, you can only freely trade with your settled cash. See this link of the violations you have to avoid, as you can still use tied up money to trade with, but you can't sell until it becomes settled: https://www.fidelity.com/learning-center/trading-investing/trading/avoiding-cash-trading-violations
See this as well: http://www.finra.org/investors/day-trading-margin-requirements-know-rules "Does this rule change apply to cash accounts?" The terminology not to get stuck on is the fact that with a margin account, you can trade with unsettled funds again as soon as you sell, hence the ability to "day-trade" in the first place. Whereas with a cash account, you're fully buying and own the shares, so you're free to sell as soon as you want, but you can't reuse the funds until it's settled (T+2 no
Thanks everyone for the feedback! Must appreciated!
I am using RobinHood and they only allow you to make 4 day trades a week if your account is under $25,000 before they block you from making any day trades.
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