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On Monday at 10 a.m. I use the full amount to buy stock A. Then at 11 a.m. I sell the entire position. Then at noon I use the the entire proceeds to buy stock B.
My brokerage company says I cannot sell stock B until the settlement date for stock A, which is Wednesday. It would be a violation of some rule if I do that.
Does anyone know what market rule specifies this? It is not the free-ride rule, is it?
What problem would it cause if I were to sell stock B also on Monday? Seems to me, although the settlements of the two trades on same day can be more complex, we can easily figure out who needs to pay how much to whom.
I still disagree with the suggestion that there is no "good faith", because we know the money is coming in. To me that is good faith.
I can see if the first settlement has problem, it can lead to problem downstream. But #1 I think it's not lack of good faith, and #2 there might be ways to deal with it, for example the clearing houses create a buffer to handle this, thus permitting much much more trading activities...
i seem to remember having this issue in the past and the solution was to activate margin borrowing.
I have margin trading now. I hardly ever take it to the maximum buying; but I would think there is also a limit with margin feature, right? Or can this really offer unlimited same day trading?
I do about 2-3 trades a day. It's already not possible for me to keep track of how much settled funds I have.
Just about all the main line brokers will have on the account fields in there website / Tradeing Portal what the settled Funds amount is.
Also the Margin on Day Trades is different the "Normal" Margins. And if you do alot of day trades you will be "Tagged" as a "Pattern Day Trader" and there are additional Rules.
I have margin trading now. I hardly ever take it to the maximum buying; but I would think there is also a limit with margin feature, right? Or can this really offer unlimited same day trading?
I do about 2-3 trades a day. It's already not possible for me to keep track of how much settled funds I have.
Yes within the margin trading rules you have a 'Day Trade buying power' number that is calculated at 4x your SMA. And you can ABSOLUTELY track how much settled funds you have at ANY broker/dealer. On your balances page there are required to list your 'Settled Cash to Trade' line item. It's there, you very much need to understand how this works.
You should start here and continue to explore and understand the rules of the sandbox you've now decided to play in.
It would be under the "available for trading" or under they "stock buying power". In one of those sections it will say settled funds to trade. Is this the app? If you have margin now on the account it may be on a lower line item below the stock buying power, but it will be there.
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