I've been trading cryptocurrencies for a little while now, and recently I have been looking into stocks, futures and forex etc. During my research, I have run into a subject called settlement times. I have been told that settlement times for most stocks are t+3 / t+2, and settlement times for forex is t+2.

Lets say I open a cash stock trading account and I have $8000 in it. Is is it legal to do a $4000 trade in one stock, sell that stock for a total of lets say $4100 after 1 hour, and then proceed to buy $6000 of another stock in the same day?

Also, how would this apply to forex and futures?


3 Answers 3


Generally yes. Even though the sale has not settled, the funds will be available for reinvestment.

However check with your broker. It also depends on the stocks you are trading in.

Yes similar concept would be applicable for future and fx.


No, the funds are not available for reinvestment until the prior trade settlement has completed. If you are trading U.S. stocks with T+2 settlement time, that means trade date plus two business days, e.g. if you execute a transaction on a Monday, the funds will settle two days later, on Wednesday. Charles Schwab has a web page describing what sorts of account violations can occur if you do transactions with unsettled sales of securities transactions.

Let's apply this to your example. You have a brokerage account with $8000 in it. You buy $4000 of one stock, and sell that stock for $4100, one hour later. You cannot buy $6000 of another stock the same day. You can buy $4000 of another stock the same day (well, almost, after accounting for any trading commissions). You will need to wait two days for the $4100 of funds from the sale transaction to clear before that money is available to use for trading.

For stocks in the U.S., the transition from T+3 to T+2 happened in September 2017.

Foreign exchange transactions work the same way. Spot forex transactions are also T+2 with the exception of these currency pairs, which settle in T+1: USD/CAD, USD/TRY, USD/PHP, USD/RUB, USD/KZT and USD/PKR.


Settlement time is grace period between your deal and ownership rights to appear. For stocks it's voting rights. As you described your interest is speculative, so you can omit this issue.

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