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I have a "You invest trade" cash account with over 25k equity and 10k cash in it, can I buy 10k worth of etf's (let's say SPY), and then sell it and buy again the same etf (SPY) let's say 5 times or more in a row during the same day within the 10k amount? Will this be considered a free ride or good faith violation? Thanks!

Edited:added details: Thank you very much Bob and Nanoman for your help, I would like to add something to the question I asked: in the account trade menu after every sale I made (I tried doing what I described yesterday in the question above 3 times in a row within 10k) I had "cash available to trade" written with a number. Does this "cash available to trade" mean that I can buy again? because it did let me do it. I will wait for messages with violation notification from the bank today, but if not, then it will appear, that it is possible to do what I asked in the first question. The screenshot of the cash available to trade after couple of buys and sells is attached. Here is the screenshot.

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    Probably (accept one of the answers here, or write your own and accept that, and) ask a new question instead of piling on new questions after you have already received answers. – tripleee Apr 2 at 7:50
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In the USA, a Pattern Day Trader is defined as a person who executes 4 or more day trades (options and equities) in a rolling FIVE business day period in a MARGIN ACCOUNT, provided the number of day trades are more than six percent of the customer's total trading activity for that same five-day period.

A PDT must maintain a minimum equity of $25k on any day that trades are made. It must be in the account prior to the day trading. If the account falls below $25k, the PDT will not be permitted to day trade until the account is restored to the $25k minimum equity level. You will have at most, 5 business days to deposit funds to meet the call. Until the call is met, day-trading will be restricted to two times maintenance margin excess (standard Reg T margin). If the margin call is not met by the fifth business day, the account will be further restricted to trading only on a cash available basis for 90 days or until the call is met.

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 leverage). In reality, you can't go to 4X because market fluctuations may trigger a margin violation.

You are only allowed to trade settled cash in a CASH ACCOUNT. That means that with T+2, the funds from a sale will not be available for two days. There is no limit to how many day trades you can make in a cash account as long as you are using settled funds. For example, assuming that you do not pay commissions, if you have $10,000 of settled cash in your account, you can make one $10k day trade or if so inclined, you can make ten $1k day trades. Once done, you will have to wait two days until the trades settle and the funds are back in your account.

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  • In a cash account, you may buy stock with unsettled funds, but may not sell that stock until the settlement date of those funds. – nanoman Apr 2 at 2:45
  • True but the OP was asking about doing it "5 times or more in a row during the same day within the 10k amount." – Bob Baerker Apr 2 at 4:11
  • Sure -- I was providing a clarification of your statement, "You are only allowed to trade settled cash in a CASH ACCOUNT. That means that with T+2, the funds from a sale will not be available for two days." – nanoman Apr 2 at 5:56

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