Posted On: 08/04/2014 11:51:38 PM
Post# of 56323
In many cases we hear this term from traders that flip stocks and need to wait 3 business days after a sale of a stock for the transaction to clear or "cool off". Violators of this rule risk getting their cash account frozen.
For example, if I want to buy a stock or perhaps increase my current position but I do not have the funds available, I can sell stock "A" today on 08/04/14 and purchase stock "B" today on 08/04/14 BUT I am not allowed to sell stock "B" until the original sale settles, which is 3 business days after the sale date of stock "A". In this scenario it would be on 08/07/14.
Technically this is known as the Freeriding rule. For details see http://www.sec.gov/answers/freeride.htm
G r O w FITX!!!
For example, if I want to buy a stock or perhaps increase my current position but I do not have the funds available, I can sell stock "A" today on 08/04/14 and purchase stock "B" today on 08/04/14 BUT I am not allowed to sell stock "B" until the original sale settles, which is 3 business days after the sale date of stock "A". In this scenario it would be on 08/07/14.
Technically this is known as the Freeriding rule. For details see http://www.sec.gov/answers/freeride.htm
G r O w FITX!!!
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