Buying Power funds not available.

SporeMonger said: "I have Firstrade for my broker and this is the first time that selling shares did not make my money available for trade right away. I understand that the transaction needs to be cleared (I forgot the proper term). There was a thread on the subject a while back that I can't find now. I am not even sure if that situation applies to me. I bought and sold in the same day and a day later the funds are still not available for trading. What's up with that?"

dumaman said: "it takes 3 days for funds too settle.. if your a daytrader this shouldnt affect you.. i think.. again though i m not daytrader i do have margin and dont have this problem... you can do it at least 3 times before you get a but whooping from the broker.."

LongArm said: "The 3-day settlement rule applies to cash accounts. Say you start out with settled funds in your account. If you use those funds to buy something on Monday, and then sell it on Monday, the funds won't settle until Thursday. You CAN immediately buy something else with those unsettled funds--but you can't SELL that stock until Thursday (when the original sell settles). In short, you can't sell stocks you haven't paid for yet. If you do, it's called free-riding. Dumaman is referring to pattern daytrader status. If you daytrade 4 times in 5 business days, you'll be deemed a pattern daytrader and you'll have to maintain a minimum of $25k in your margin account."

thezster said: "[QUOTE=LongArm]The 3-day settlement rule applies to cash accounts. .[/QUOTE] The 3 day settlement rule applies to margin accounts also... It just takes buying a few more shares for it to go into effect.... If you tie up all your margin money.... then sell everything... it takes the three days for it to become available again...."

SporeMonger said: "That's exactly what I needed to know. Thanks to all of you. :th_dblthumb2:"

LongArm said: "[QUOTE=thezster]The 3 day settlement rule applies to margin accounts also... It just takes buying a few more shares for it to go into effect.... If you tie up all your margin money.... then sell everything... it takes the three days for it to become available again....[/QUOTE] Maybe E*Trade has their own rules, Z, but that's not the way Scottrade works. I can buy using full margin, then sell everything, then do it over and over again until the cows come home without waiting at all (that's assuming at least $25k in the account). And this is the way I understand most margin accounts to work, based on everything I've read. Every reference I've seen to free riding and the 3-day settlement rule is in regards to cash accounts, not margin. Yes, technically, the trades may still take 3 days to settle in a margin account, but the broker is loaning you money in order to bypass that little detail. Once you sell, you should have a clean slate and be able to buy again. Shoot, if I had to wait 3 days after using up my margin, trading would be pure hell for me if not impossible (at least the way I trade now). Again, maybe E*Trade has their own stricter rules on that?"

thezster said: "I will have to admit that I may have spoken out of turn.... I have, once, been slowed by unsettled funds in my margin account.... long long ago and far far away... and simply assumed it was due to using my entire account (which, I might add, was a pretty scarey period)...."

DaveinJapan said: "[QUOTE=thezster]The 3 day settlement rule applies to margin accounts also... It just takes buying a few more shares for it to go into effect.... If you tie up all your margin money.... then sell everything... it takes the three days for it to become available again....[/QUOTE] Like a dummy, I did not realize that. Thank you, Z. You just saved my butt. I'm interested in maybe buying something on Thursday (IPO...if it works out, of course) and that information just changed my whole strategy for the week! I was planning to free up some margin cash on Wednesday or Thursday morning, now I have to do it Monday. I'm REALLY glad you wrote that! :)"