Question about Day Trading Rules...

[yoyomama]

Not really day trading(because I'm not doing this on Margin) but the way I understand it as told to me by Scottrade...is that if I use my own cash of Settled Funds, then I can do as many transactions as I want to in any given time period. Again, not on Margin - my own Settled Funds. Am I understanding this correctly?

Thanks!

[billyjoe]

yoyo,

I would say you are correct. Keep growing those settled funds and you'll never have a worry.

----------------billy

[IIC]

Not really day trading(because I'm not doing this on Margin) but the way I understand it as told to me by Scottrade...is that if I use my own cash of Settled Funds, then I can do as many transactions as I want to in any given time period. Again, not on Margin - my own Settled Funds. Am I understanding this correctly?

Thanks!

As long as it is not a margin account you can day trade as many times as you want as long as you always buy with settled funds...Doug

[yoyomama]

Okay, thanks guys...appreciate it.

I can buy with unsettled funds but I can't sell those stocks until the funds that I used to buy them with are settled...right?

[skiracer]

if you had 15000 in an acct. and you bought 200 shares of anything for $15 a share you spent $6000 of what you have available. you can sell those shares the same day but cannot use those funds until they clear or are settled. the same day you could buy any combination of shares as long as you had the money to cover each trade. with 15000 in the acct. you could get another 15000 of margin which doubles your buying power depending on what you want to buy but brings in a whole new set of rules. the sec will term you a "pattern day trader" if you make 3 trades or more in a day and require you to maintain a $25000 balance in your trading acct. if you are going to continue to do that.

[Karel]

Okay, thanks guys...appreciate it.

I can buy with unsettled funds but I can't sell those stocks until the funds that I used to buy them with are settled...right?

Yes, that seems to be the rule. From Trading Direct:

Reg T Section 220.8(a)(1) states that a broker-dealer may use a cash account to buy a security for a customer if:
(i) There are sufficient funds in the account; or
(ii) The creditor accepts in good faith the customer's agreement that the customer will promptly make full cash payment for the security or asset before selling it and does not contemplate selling it prior to making such payment...

The second condition requires the completed settlement of the funds used in buying before the buyer is allowed to sell. You might use unsettled funds to buy another stock you intend to hold till after the funds settle, but this effectively means that you are only able to day trade with the same funds once in a settlement period.

Regards,

Karel