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Monday 10am: Buy stock A for 10K
Monday 2pm: Sell stock A for 10K
Monday 3pm: Buy stock B for 10K
Question: On which day can I sell stock B position without triggering the free-riding violation?
My own answer: Since stock A's proceed will come in on T+2, meaning Wednesday, on Wednesday I should be able to sell stock B. But a brokerage company accused me of freeriding.
Last edited by RobertFisher; 09-30-2020 at 09:41 AM..
I have restriction at my Vanguard account but not at Fidelity, I can sell 15 minutes after I made a trade. I mostly trade options though. Don’t know if it makes a difference or not.
Monday 10am: Buy stock A for 10K
Monday 2pm: Sell stock A for 10K
Monday 3pm: Buy stock B for 10K
Question: On which day can I sell stock B position without triggering the free-riding violation?
My own answer: Since stock A's proceed will come in on T+2, meaning Wednesday, on Wednesday I should be able to sell stock B. But a brokerage company accused me of freeriding.
Mine is 3 days, so it will be Thursday on your example.
Also, I think the violation occurred when you bought Stock B on same day? Basically you bought $20K worth using $10K fund.
I beleive the free ride restriction should only apply to opening a new position and not closing an existing one. I occured one a few years ago accidently trading a non marginable security in a margin account.
The violation would be triggered by opening the position not closing it.
I beleive the free ride restriction should only apply to opening a new position and not closing an existing one. I occured one a few years ago accidently trading a non marginable security in a margin account.
The violation would be triggered by opening the position not closing it.
For regular stock purchase you don't need cash up-front. You can deposit the funds just before settlement.
I always have funds in acct before placing order; but I remember this was allowed...
I beleive the free ride restriction should only apply to opening a new position and not closing an existing one. I occured one a few years ago accidently trading a non marginable security in a margin account.
The violation would be triggered by opening the position not closing it.
The restriction certainly can prevent sells if you used proceeds from a sell, purchased another security you can not sell until the first sell settles
The restriction certainly can prevent sells if you used proceeds from a sell, purchased another security you can not sell until the first sell settles
Hmmm, is new to me. A unique area most people never encounter.
In my case it was deposit something like 40k to in next several days to avoid restriction and I didn't have 40k in cash sitting around at the time so just took the restriction.
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