Interactive Broker---sell a stock and immediately buy another in cash account
I am new to IB, and still in the process of opening my account.
I used Scottrade and fidelity, and both cash accounts allow me to sell a stock and immediately buy a stock.
But IB's website says cash account holders have to wait 3 days for settlement before they can use the cash to enter another trade, which is quite weird and inconvenient.
Does anyone know if that info is still up to date? I haven't seen that rule in any other brokers. (Otherwise, what is the point of SEC Regulation T? )
There are cash accounts, there are margin accounts, and there are pattern day trading accounts. The T+3 days applies to cash accounts. Make sure you check the box you want to apply for a margin account.
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... and this is not related to IB's won rules and regulations, but official exchange procedures.
You need 3 days for your trade to settle; and until then you can either use the remaining free cash in your account if any, or rely on margin loans from your broker to do so while you wait for trade settlement.
Make sure you apply for a margin account if you are to trade actively, cash accounts would limit you a bit in your trades.
Successful people will do what unsuccessful people won't or can't do!
I don't think so. I used Scottrade and Fido, and for both, I could sell and immediately use the unsettled cash to buy.
Let's think about it this way:
I sell my stock to buyer A. Buyer A won't pay me until 3 days later.
I immediately buy stock from seller B. I don't have to pay seller B until 3 days later.
Then 3 days passed. Buyer A gives me the cash, and I immediately give it to seller B.
That's it. There is no problem at all here.
In fact, if no brokers allow buying immediately after selling, then "Good faith violation" would never occur!
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