/biz/ - Business & Finance

>>13433393
A cash only trade works by a T+2 settlement rule (set by SEC). Basically, the moment you sell out of a trade, it takes two trading days after for the sold funds to actually show back in your broker account (and become usable again).

Margin accounts usually don't follow this rule because the broker can just give you the cash from the sale (from their borrowed money) right away, while the actual funds settle in the background. They, of course, want you to trade more and pay more commissions, so they'll spot you the money up front.

Even though it doesn't look like it and they don't advertise it in this way, all Robinhood accounts are margin, technically, as you get the sold funds from any trade back available to trade right away (I believe its anything under $1000 a day, to MOST users). However, if you have under $50,000 in any account, anywhere, that broker will hit you for a PDT strike for buying and selling same day.

If you have over $50,000 in an account, margin or cash, you don't get PDT strikes. Also keep in mind that if, while trading, your total in acct falls under 50k, and you buy sell same day, you'll get a strike