Online Brokers That DON'T Have A Settling Period?

clock said: "So far I've been very pleased with Scottrade but the fact that when I trade it's usually with the majority of the money in my account, the 2 or 3 day "settling period" for my fund drives me nuts. Is this a Scottrade-only thing, or is it more widespread? Thanks!"

Rbreb13 said: "Its an SEC regulation and all brokers have to follow this rule. If you get a Margin account you can sidetrack the rule. I have one with ST. I've never used the Margin, I only have it to get around the settled funds problem."

clock said: "[QUOTE=Rbreb13;60359]Its an SEC regulation and all brokers have to follow this rule. If you get a Margin account you can sidetrack the rule. I have one with ST. I've never used the Margin, I only have it to get around the settled funds problem.[/QUOTE] See the only problem with that is I don't think I meet their requirements. Is there any other way for me to get around this, or am I stuck? And also, I can buy a stock with unsettled funds and not be penalized, as long as I don't sell it for a couple days, right?"

Rbreb13 said: "Yeah, with ST they allow you to buy with unsettled funds but if you sell before the 3 days is up (3 days can kill an account). They'll give you a "free ride" warning. The second warning (sometimes first warning) will usually result in a restriction where they'll only let you buy with settled funds."

clock said: "[QUOTE=Rbreb13;60364]Yeah, with ST they allow you to buy with unsettled funds but if you sell before the 3 days is up (3 days can kill an account). They'll give you a "free ride" warning. The second warning (sometimes first warning) will usually result in a restriction where they'll only let you buy with settled funds.[/QUOTE] Okay, last question; if I upgrade to a margin account and only use my funds and NEVER borrow any from ST, can I avoid the 3-day rule and avoid paying any interest? Thanks for the help, I'm just trying to find a way I can "day trade" a little bit more."

Rbreb13 said: "In a nutshell, YES. But be sure to watchout for the "Pattern Day Trader" rules! No more than 3 daily buy/sell trades in a 5 business day period or they will require you to maintain a balance of $25k in cash and stocks at all times."

clock said: "[QUOTE=Rbreb13;60366]In a nutshell, YES. But be sure to watchout for the "Pattern Day Trader" rules! No more than 3 daily buy/sell trades in a 5 business day period or they will require you to maintain a balance of $25k in cash and stocks at all times.[/QUOTE] Yes I forgot to include that, if I stay under that and never borrow any money I should be fine. Thanks for the help, I never even considered this option."

FirefighterB said: "[QUOTE=Rbreb13;60366]In a nutshell, YES. But be sure to watchout for the "Pattern Day Trader" rules! No more than 3 daily buy/sell trades in a 5 business day period or they will require you to maintain a balance of $25k in cash and stocks at all times.[/QUOTE] I have a question about this. I'm guessing that this is 3 daily trades, every day, for 5 days, right? If it is just trading 3 stocks (or the same stock 3 times) in a 5 business day period, then I'm not getting any love from Scottrade. I have definitely done this and I have over $25k, yet I have never received the PDT notification, nor the 4x margin."

LongArm said: "What gets you deemed a PDT is 4 or more DAYTRADES (total, not per day) in a 5 business day period. A daytrade is the opening and closing of the same position on the same day. You can buy & sell OVERNIGHT positions 'til the cows come home, but that doesn't matter as far as far as the PDT thing goes. Also, if you ARE deemed a PDT, a broker isn't REQUIRED to give you the 4x buying power, although most do."

FirefighterB said: "Thanks, LA. Do they have to alert you that you are considered a PDT? Also, are the obligated to deem you a PDT as soon as you execute the 4+ daytrades, or is it just if they "catch" (for lack of a better word) you? I'm fairly certain I have been in and out of more than 3 daytrades in a week, yet I do not have (to my knowledge) PDT status."

LongArm said: "I don't know that you would be alerted if you already have the $25k in your account. I don't believe I was. Less than $25k, you are supposed to be alerted (and ordered to deposit more money) as soon as executing 4 daytrades in 5 days. I suppose if you don't get caught, they can't label you a PDT...but they probably have ways of tracking such things automatically. One exception to the rule: If your daytrades account for less than 6% of your trading during that period, you won't get deemed a PDT. I usually don't bother mentioning this because it seems far-fetched that one would execute 100 OVERNIGHT trades during a 5-day period. I guess, though, that there could be some wacky trading methodologies out there that I haven't thought of. :laugh: You might ask Scottrade about the 4x margin if you think you should be getting it. Unless, of course, you don't WANT to be classified as a PDT, which you might not."

FirefighterB said: "As always, thanks LA. I was just feeling left out of the special club. I've just moved some money around and trying out a few new things, so I was wondering if I needed to make sure I have the minimum."

newinvestor123 said: "LA: I have been deemed a PDT, and I am thinking of withdrawing enough funds from my account to put it below the $25k minimum. What would happen if I were to do that? Account freeze?"

LongArm said: "[QUOTE=newinvestor123;60484]LA: I have been deemed a PDT, and I am thinking of withdrawing enough funds from my account to put it below the $25k minimum. What would happen if I were to do that? Account freeze?[/QUOTE] They should give you 5 days to get your account back up to $25k during which you'll be limited to the normal 2x margin. If it's not back to $25k in 5 days, yes, your account will be "frozen"--which really means trading will be limited to a cash available basis--for 90 days or until your account balance is replenished. If you haven't done much daytrading in a while, you might ask your broker to UNclassify you first. They may not go for it (they often don't), but it's worth a shot."

newinvestor123 said: "Okay, good. I was worried about not being able to sell anything if my balance fell below $25k... Thanks again LA."