Few resources state that swing trading Roth IRA account would be difficult due to SEC's Reg T+3 which per SEC Website is now Reg T+2 effective Sept. 5, 2017.

Even prior to SEC's amendment, my thought was if I sell XYZ then immediately buy ABC, as long as my swing exit plan for ABC was 3 or more days later there would be no restriction whatsoever and I could then immediate rebuy XYZ or even ABC, rinse/repeat spacing my repositions 3 days apart.

Is my understanding above correct? Does this avoid "free-riding."

i.e. exit[ABC] --immediate--> entry[XYZ/ABC], as long as I held ABC 3 (now 2) days or more.

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    You can swing trade as often as you like as long as you are using settled funds otherwise it is a Free Riding violation. Mar 16, 2018 at 14:07
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    In a cash account, you must pay for the purchase of a stock before you can sell it. IOW, the free riding violation occurs when you sell stock that was purchased with unsettled funds. Mar 16, 2018 at 14:22
  • @BobBaerker Reg T+2*3 pertains to Free Riding. I just don't know which part of the transaction triggers the Free Riding. "Using settled funds" does this mean using settled funds to Buy? or the Selling of assets Bought with unsettled funds?
    – Dustin
    Mar 16, 2018 at 14:22
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    Bear in mind that we're talking about swing trading not day trading. Otherwise, you run afoul of the Pattern Day Trader rule. Mar 16, 2018 at 14:31
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    By definition, day trading is the buying and selling of securities within the same trading day. The broker has no discretion in this. Mar 16, 2018 at 15:56

1 Answer 1


Correct. Had an experience on the unsettled trades. It was a lesson for me. Otherwise, I'll get a penalty and put my account on hold for 90 days

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