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Stock market trading question

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Mike Seward

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Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
I have a small IRA account with one stock (an ETF) in it. Monday of this week, I sold the stock and bought another stock with the proceeds.
Tuesday morning, I sold the second stock. The broker notified me that I had sold a security purchased with unsettled funds and my account would be placed on a 90 day trading restriction.

Does that make any sense at all?

My thought is that Monday's trades will settle today, (Thursday) while Tuesday's sale will settle tomorrow, (Friday).

Any thoughts?
 

3 Putt

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Joined
Aug 18, 2005
Professional Status
Certified General Appraiser
State
Ohio
T+3 = trading day plus 3 more to settle. In the old days, when people actually held stock certificates, they had to allow time for you to get to the office with the actual stock certificate.

The money from the stock you sold Monday will not be yours to keep or use until Thursday. Sounds like the amount you used on Tuesday to buy, dipped into the funds from the stock sold on Monday.

They don't want you to day trading the account. Hope that helps.
 

Mike Seward

Thread Starter
Senior Member
Joined
Jan 23, 2002
Professional Status
Certified Residential Appraiser
State
Florida
I used the money from the stock I sold on Monday to immediately buy a second stock. They had no problem with that. They had a problem with my selling the second stock on Tuesday morning.

Is this a rule particular to that Broker (E-Trade), an exchange rule or because it was an IRA account?
 

murray stroupe

Senior Member
Joined
Apr 27, 2005
Professional Status
General Public
State
Tennessee
Cool Thoughts

I have a small IRA account with one stock (an ETF) in it. Monday of this week, I sold the stock and bought another stock with the proceeds.
Tuesday morning, I sold the second stock. The broker notified me that I had sold a security purchased with unsettled funds and my account would be placed on a 90 day trading restriction.

Does that make any sense at all?

My thought is that Monday's trades will settle today, (Thursday) while Tuesday's sale will settle tomorrow, (Friday).

Any thoughts?
===============
Mike ;
Varies from broker to broker;
perhaps it should not because of various security laws.

Actually the brokers would probably prefer not to even have that law;
more commissions for them.
==================================================

And some got in trouble with the regulators because of that,free riding , i think they call that transgretion.

Fidelity accused me of breaking that law years back;told them you may be right, but I am not NOW ,nor do i want to be, a sec lawyer. Better trade a smaller % of account anyway-Cool as snow

And depending on th %% you used of your account;
almost certainly broker is right, most of them don't like that law,
but we have to respect it.
 
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