How do you get past the 3 day round trip day trades in 5 days?

I have a TD Ameritrade account with $25,1XX and have used 2 roundtrips. How can I freely buy/sell without worrying about these roundtrips? I guess I was under the impression that if I maintained 25k then I wouldn't have to worry about this, but it is saying I only have 1 daily trade available.

If I truly want to sit here all day long buying and selling as much as I want, what must I do?

Are you trading with settled cash? Good Faith Violations are an entirely different requirement.

The day trading rule only applies to margin accounts. If you have a standard cash-only account you can have unlimited trades of the same thing in a day... provided that your cash is settled.

Stock/ETF trades settle on the third business day after you sell.

Options settle the next day.

You can make a purchase with unsettled cash but if you sell before the cash used to buy becomes settled you incur a Good Faith Violation. Pretty sure this a requirement in both kinds of accounts, so in a margin account your only way around this would be to take another loan... brokers are happy to loan you some cash that's instantly settled (I don't have a margin account so I'm not 100% sure).

I currently have a margin account... do you know if there is a way to switch to cash? I know you can in Robinhood, but didn't know if it was that easy in TD.

Assuming you didn't take any loans (or they're all repaid), I'm sure you could transfer it to a standard account, but I'd be surprised if you can just flip a switch.

As to your original problem, I bet you're close enough to the $25k limit that they're buffering you just in case your account were to drop below before your transactions settle.

Few things with TDA. One, I called them to get them to take margin off since I am below the 25k funds. Two, it still shows the "Day Trades Left" in TOS but I think that is just because the system won't turn off that information if it doesn't apply to you.

leoj said:

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Few things with TDA. One, I called them to get them to take margin off since I am below the 25k funds. Two, it still shows the "Day Trades Left" in TOS but I think that is just because the system won't turn off that information if it doesn't apply to you.

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Do you still get any kind of warning message stating you are going to be "flagged as a Pattern Day Trader" or has that gone away. I am sitting "0 Day Trades left." However made $1.5k over those 3 roundtrip trades over the last two days and would love to get back to trading, but I am kind of stuck right now having the margin account.

Just to get this correct...if I am working in a cash account. If I have $20k in my account and buy $15k worth of Apple on Monday and sell it same day then I would only have $5k to play with until Thursday where then my Apple stock would be settled?

You essentially cannot buy with anything that is unsettled? Is that the Good Faith Violation?

Thanks!

I misspoke earlier. Funds usually settle the 2nd business day, but there's been a few times when I think I ought to have settled funds and Fidelity says I don't... so I reinterpreted the rule in my head as the third day.

In your example, you'd be able to buy something else (let's say Disney) immediately after selling Apple. But then you wouldn't be able to sell Disney until Weds when the proceeds from the Apple sale settle.

And then of course, the clock starts over again on the next thing you buy.

So basically, you either have to keep some cash on the sidelines or not day trade.

Options settle the next day, so it's not as ornery. I keep my account with a significant portion of cash, and will sometimes trade options in small doses throughout the day, maybe carry a few into the next day, and then roll into the next day with a fresh bucket of settled cash to trade with. It works with options. With stocks themselves, you'd have to be really savvy and make picks with amazing gains or else the cash on the sidelines is hurting your overall account gains.

Until today I was unfamiliar with margin account rules since I trade solely in an IRA (cash account rules) but I've since learned that Good Faith Violations don't exist in margin accounts (but the pattern day trading rule does),

TLDR: I'd say that if you can keep yourself above the $25k limit, you're probably better off keeping a margin account if you plan to make frequent trades.

deadbq03 said:

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I misspoke earlier. Funds usually settle the 2nd business day, but there's been a few times when I think I ought to have settled funds and Fidelity says I don't... so I reinterpreted the rule in my head as the third day.

In your example, you'd be able to buy something else (let's say Disney) immediately after selling Apple. But then you wouldn't be able to sell Disney until Weds when the proceeds from the Apple sale settle.

And then of course, the clock starts over again on the next thing you buy.

So basically, you either have to keep some cash on the sidelines or not day trade.

Options settle the next day, so it's not as ornery. I keep my account with a significant portion of cash, and will sometimes trade options in small doses throughout the day, maybe carry a few into the next day, and then roll into the next day with a fresh bucket of settled cash to trade with. It works with options. With stocks themselves, you'd have to be really savvy and make picks with amazing gains or else the cash on the sidelines is hurting your overall account gains.

Until today I was unfamiliar with margin account rules since I trade solely in an IRA (cash account rules) but I've since learned that Good Faith Violations don't exist in margin accounts (but the pattern day trading rule does),

TLDR: I'd say that if you can keep yourself above the $25k limit, you're probably better off keeping a margin account if you plan to make frequent trades.

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Highly appreciate the responses! Just making sure I understand the margin before switching to cash...

If my margin account had $25k in it to prevent the Pattern Day Trader and I bought $15k of Apple and was watching it during the day.... if the net value of my account dropped down below the $25k before selling, would I get flagged or it is only if you sell it for a loss below the $25k?

I have no desire to borrow beyond the cash I have. What is the benefit of the margin account if I have no desire to do that? Do the funds get settled immediately under margin? I am not getting into options or anything. Just wanting to trade stocks to learn and not have to worry about only having 3 trades in 5 days.

How long did it take for your account to switch to being margin free? Was wondering if it was immediate?

AnyOtherName said:

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deadbq03 said:

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I misspoke earlier. Funds usually settle the 2nd business day, but there's been a few times when I think I ought to have settled funds and Fidelity says I don't... so I reinterpreted the rule in my head as the third day.

In your example, you'd be able to buy something else (let's say Disney) immediately after selling Apple. But then you wouldn't be able to sell Disney until Weds when the proceeds from the Apple sale settle.

And then of course, the clock starts over again on the next thing you buy.

So basically, you either have to keep some cash on the sidelines or not day trade.

Options settle the next day, so it's not as ornery. I keep my account with a significant portion of cash, and will sometimes trade options in small doses throughout the day, maybe carry a few into the next day, and then roll into the next day with a fresh bucket of settled cash to trade with. It works with options. With stocks themselves, you'd have to be really savvy and make picks with amazing gains or else the cash on the sidelines is hurting your overall account gains.

Until today I was unfamiliar with margin account rules since I trade solely in an IRA (cash account rules) but I've since learned that Good Faith Violations don't exist in margin accounts (but the pattern day trading rule does),

TLDR: I'd say that if you can keep yourself above the $25k limit, you're probably better off keeping a margin account if you plan to make frequent trades.

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Highly appreciate the responses! Just making sure I understand the margin before switching to cash...

If my margin account had $25k in it to prevent the Pattern Day Trader and I bought $15k of Apple and was watching it during the day.... if the net value of my account dropped down below the $25k before selling, would I get flagged or it is only if you sell it for a loss below the $25k?

I have no desire to borrow beyond the cash I have. What is the benefit of the margin account if I have no desire to do that? Do the funds get settled immediately under margin? I am not getting into options or anything. Just wanting to trade stocks to learn and not have to worry about only having 3 trades in 5 days.

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The benefit to the margin account is that you don't have to worry about using settled cash. There's no such thing in a margin account from what I understand. So if you're above $25k in a margin account then you're exempt from the Pattern Day Trading rule and the Good Faith Violation rule so you can trade as much as you want.

Based on what was said on the other thread, it sounds like you're only getting the warnings because you're so close to the limit.

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Looking at TD Ameritrade, would you suggest a standard account for a beginner. I've got retirement and educational accounts with other institutions but not a brokerage account.

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Cash account if you want to day trade, but you have to let the trades settle t+2. (Make a trade on Monday, you have to wait until Wednesday to wait for that money to settle before buying/selling against it)... or you can get a margin account which will allow you to trade as much as you want without worrying about money settling, but you must maintain $25k equity at all times.

I went through all of this last week...started with Robinhood and switched over to TD Ameritrade (much better minus making $1700 on my first day and losing $2300 the next two ). Make sure you understand the differences. I advise you read these if you do not understand the difference and familiarize yourself with the links below.

Cash account vs Margin account
https://www.fool.com/the-ascent/buying-stocks/articles/cash-account-vs-margin-account/

Cash account violations:
https://www.fidelity.com/learning-center/trading-investing/trading/avoiding-cash-trading-violations

AnyOtherName said:

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How long did it take for your account to switch to being margin free? Was wondering if it was immediate?

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Was next business day, really quick.