How do I go around the 'good faith violation' when day trading? (IRA, trade options)

[mitak]

I've googled this question. It says to just wait until the money settles before buying the stock again, after selling. So a few years ago.. there was no 'good faith violation'. As far as I remember, I could buy and sell and buy and sell all day long. Even with $10K of trading cash, I was able to make decent money for the week. Now there are opportunities lost. Which mean, I sell with a gain, and then the stock drops that afternoon or the next day.. and I'm just sitting and waiting for my 2-3 days to go by so I can buy again... IF the stock drops again. Is there a way around this? Do I need a margin account? I don't trade options or any of that.. I don't know how that works.

[Lowexpectations]

Buy treasuries with your cash. Margin them and trade on your margin cash/buying power


Also don’t say trade

[mathjak107]

fidelity lets me sell , then buy immediately..i just can’t sell the same day again

[txfriend]

Originally Posted by mathjak107

fidelity lets me sell , then buy immediately..i just can’t sell the same day again

Same here, I think if you have extra money in your account you can trade all you want.

[phoebesmom]

It sounds like you are talking about a freeriding violation:
https://www.investopedia.com/terms/f...f%20freeriding.

Schwab will give you a warning but if you do it two or three times in I think it is 6 months they shut down your trading privileges.

[mathjak107]

Originally Posted by txfriend

Same here, I think if you have extra money in your account you can trade all you want.

it just tells me if i sell before the funds clear it will be a good faith violation because i dont have enough cleared cash to cover it

[capoeira]

Originally Posted by mitak

Is there a way around this? Do I need a margin account? I don't trade options or any of that.. I don't know how that works.

You need a margin account with a minimum balance of $25,000. The key is having a balance over $25,000 to avoid those restrictions. I suggest researching PDT - Pattern Day Trading.

[prospectheightsresident]

Originally Posted by capoeira

You need a margin account with a minimum balance of $25,000. The key is having a balance over $25,000 to avoid those restrictions. I suggest researching PDT - Pattern Day Trading.

This is what I took the OP to mean as well, and what you describe is how I always go around the issue.

[mitak]

Originally Posted by capoeira

You need a margin account with a minimum balance of $25,000. The key is having a balance over $25,000 to avoid those restrictions. I suggest researching PDT - Pattern Day Trading.

Ok, thank you. I read that somewhere but I'm still not sure how margin accounts differ. That's good information, thanks!