How long should I wait after selling a stock?

Posted by echo21 on May 22, 2008 (08:39AM)

Once I sell an equity, how long must I wait before I can use the money to buy another stock?  I looked in the FAQs and all it said was that the sale money needed to be in the account, and if it isn't and you use the money, you'll be put on 90 day restriction and must buy with a broker.  It doesn't specify the waiting time.  Can someone help me?  Thx    

Posted by spence on May 22, 2008 (08:59AM)

You can buy another stock with money from the stock you just sold, but you won't be able to sell the newly bought stock until the funds from the sell settle (3 business days) . If you were to sell the new stock before the 1st stock's settlement date, you would be in violation of regulation T and would be on restriction for 90 days. Hope that helps!

Posted by RogerLee on May 22, 2008 (09:15AM)

It seems that the longer your a TradeKing customer and the more trades you place the unsettled funds thing seems to go away.  As I began placing more trades I noticed that my funds from sales clear the same day or the next day.  I assume once they figure out your trading habits they put more trust upon your account.   It's the only thing I can think of.

Spence is right however that if your showing unsettled funds, you can buy stock with it, you just can't resell it until those funds clear. 

 

Piano_thumb Brokerage Account

Posted by CMB on May 22, 2008 (11:00AM)

If you are going to be doing a lot of frequent trades you might want to change your account to a margin account.  With a margin account you don't have to deal with unsettled funds.  If you don't like the idea of buying on margin you don't have to, but at least you can trade quicker.  You will need to maintain a minnimum account value of $2000.  Call tradeking with any questions about it.

Posted by irishneal11 on May 23, 2008 (02:57AM)

Good Afternoon Spence and RogerLee:


I just want to clarify that trade settlement is governed by Regulation T of the Securites and Exchange Act of 1934, this regulation affects all brokerage firms in the U.S.  This is not a policy to which TradeKing can make any exceptions to as you build a trading history with us as RogerLee suggests.  Spence is correct that if you do use unsettled funds to make a purchase of another stock in a cash account then you have to hold that stock through settlement. Stock trades settle 3 business days after the trade date under Reg T, Options trades settle 1 business day after the trade date under Reg T. If you have a margin account with $2000 or more (the Federal Margin Minimum) you can trade with unsettled funds without the requirement to hold the new purchase through settlement. You would need to be aware of SEC Daytrading rules for accounts with less then $25,000, here is a link to our Daytrading Disclosure

http://content.tradeking.com/wiki/display/compblog/2008-05-22+-+Neal+Atkins+-+restricted+penny+stocks

Please note that margin is not allowed in IRA or Custodial accounts under Federal regulations.


Regards
Neal Atkins - Supervisor E-Communications - TradeKing.

Posted by RogerLee on May 23, 2008 (04:41AM)

Neal,

Does this rule only apply to stocks and not to options?  I've been trading options exclusively for several months and maybe thats why I haven't been running into unsettled funds?  I don't really pay attention to it that closely. 

 

Posted by stangracin on May 23, 2008 (07:09AM)

Roger,

 I believe Option trades settle in 1 day, and not the 3 days that stocks require.

 -Doug

Posted by RogerLee on May 23, 2008 (09:40AM)

Ahhh, maybe I should pay more attention :)

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