I have some confusions on how the trading violations get triggered. Example of trades in one day: $20 cash in my account to start Buy $2 worth of X Sell it for $3 Buy $2 worth of X Sell it for $3 Buy $2 worth of X Sell it for $3 Buy $2 worth of X Sell it for $3 Because the total amount of buys and sells equals $20 am I unable to trade again until T+2?
The dollar amount of the trades doesn't matter. If you buy and sell one stock in a day, that is a daytrade. If you do that 3 times in 5 days then you are in violation. Your example would get flagged after #6.
Here's an article on Pattern Day Trader, but @anotherdevilsadvocate summed it up very well. https://www.investopedia.com/terms/p/patterndaytrader.asp
You can trade as often as you like with settled cash in a cash account. With $100 of settled cash, you can make one day trade for $100 or ten day trades for $10 each. Doing this in a margin account (more than 3 day trades of options and equities in a rolling five business day period) gets you flagged as a Pattern Day Trader and then you are subject to the $25k minimum account equity requirement
You are correct. If this is settled cash in a cash account then you have no problem. It's only applicable to a margin account (see my other answer).
Perfect spindr0, Thanx! So the way I understand it once you are a out of settled cash you can still buy X with unsettled cash but you can not sell it until the until that money you bought it with is settled. I'm surprised the brokerages dont have the algorithms to prevent this from happening rather than penalizing after the fact.
All of the brokers that I have dealt with provided the "Available To Trade" dollar amount, whether it be settled cash (cash account) or buying power in a margin account. I suspect that some brokers don't and that's a disadvantage.
