I have a question about the way you can trade on a cash account:

I know that if you have lets say a $1,000 account and you buy $1,000 worth of ABC stock and sell them on the same day say Monday from when you bought them, assuming you didn’t gain or lose anything, you wont be able to trade that $1,000 until Thursday so the trading day +2 days


If I buy $1,000 Worth of ABC on Friday and sell them on the same day, will the funds clear on Monday? will I be able to trade on Monday? Or that doesn’t count as trading days and I wont be able to trade until Friday (trading day) +2 trading days so will I be able to trade again on Wednesday instead?

  • 1
    Businesses work on business days. Weekends are not business days for the stock and bond markets.
    – RonJohn
    Nov 27, 2019 at 3:41
  • @RonJohn I know that, thats not what I’m asking there...
    – RaniFaris
    Nov 27, 2019 at 3:43
  • 1
    Really? I'm confirming the last sentence of your question.
    – RonJohn
    Nov 27, 2019 at 3:44
  • @RonJohn so what you’re saying is that if I use my entire account capital and sell on the same day at Friday I wont be able to trade until Wednesday?
    – RaniFaris
    Nov 27, 2019 at 3:46
  • Are you a day trader?
    – RonJohn
    Nov 27, 2019 at 3:50

1 Answer 1


In the U.S. settlement for equities is T+2 or two business days.

There is no limit to how many day trades you can make in a cash account as long as you use settled funds. If you have $10k of settled cash, you could make one $10k day trade today with or if you want, ten $1k trades. Either way, you cannot trade those funds until two days from now.

The Pattern Day Trader rule applies to day trades in a margin account. If you make more than 3 day trades (options and equities) in a rolling 5 business day period, provided the number of day trades is more than six percent of the total trading activity for that same five day period then you are considered to be a Pattern Day Trader. Then, you must maintain a minimum equity of $25k in a margin account on any day that trades are made and it must be in your account prior to the day trading. If the account drops below $25k, no day trades will be allowed until the account is restored to the $25k minimum equity level.

Per Reg T, a PDT is allowed intraday to trade four times the maintenance margin excess in the account as of the close of business of the previous day but must revert to the standard 50% overnight margin by the end of the current day. Brokers have the right to set more restrictive levels of margin (less than 4:1 intraday margin).

  • Thanks for putting the time into answering my question. Also, assuming every time I’m using my entire capital here, how many trades can be done on a cash account every week? It’s 2 right? I can trade on Monday then Thursday and thats it right? Thanks again
    – RaniFaris
    Nov 27, 2019 at 12:07
  • T+2 settlement means that if you trade on Wednesday, the trade must be settled by Friday, assuming no intervening holiday. I would assume that in this case, the cash would be available Friday morning but since I'm decades away from being aware of what time a trade settles, you should check with your broker. If you have access, your daily online brokerage account statement might reflect availability of funds. Nov 27, 2019 at 13:17

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