Cash Account Trade Restriction

Discussion in 'Trading' started by u130747, Sep 16, 2002.

  1. u130747


    I just got a letter from Ameritrade concerning Trading Restrictions in Cash Accounts.

    They stated that NASD just provided further guidance. They stated clients must make full cash payment for securities purchased in a cash account before those securities are sold.

    Then they give an example:

    Beginning of day: Account has $10,000.00 cash

    Client buys $10,000.00 of Company A.

    Later sells company A for $10,000.00.

    Then buys $10,000.00 company B.

    Finally sells company B for $10,000.00.

    They then state that the last transaction , the sale of shares in company B would create a situation that the client did not have cash in the account to pay for the shares of company B before the sale of company B shares prior to the sale.

    Now how am I suppose to trade my IRA account. I can't convert to a margin account or add more funds. I am confused. Please help.

    Bert:D :D
  2. birddog


    You are limited to one trade a day - so make it a sweet one. And remember there is always tomorrow.

    By the way, I have a client account in the same situation no shorts and one trade per day - he has done quite well since I am really patient to take the trade.
  3. prox


    I day trade with a $10k account on a Datek cash only account. They haven't given me any grief about it and I see no reason why they should.
  4. The problem became, that you would do a few of those trades a day and potentially lose money. So when time came for the firm to settle up, you didn't have enough money in the account to settle the last 10K trade. Since it wasn't a margin account, they now had a trader who was technically trading on margin, and potentially open themselves up for a lawsuit.