Can Cash Account Buy and Sell Stock on Same Day?

 I just opened a cash account a week ago. I didn't open margin account because I'm inexperienced on stock treading and don't want to borrow money buy stock. I'd like to know after buying stock, how long can I sell it? Can cash account buy and sell stock on same day? Like, buying XYZ and selling XYZ on Monday, and then wait for fund to settle. After fund settled, I buy and sell stock on Friday again?

Replied from Scottrade:
I am responding to your question regarding trade frequency in your cash account.
The industry-wide equity trade settlement period was established by SEC Rule 15c6-1. The current industry-wide settlement date for equity trades is trade date plus three business days (T+3).

If you were to purchase stock using settled funds, you would be able to sell those shares at any time. You can also immediately use unsettled sale proceeds for additional stock purchases; however, you need to be aware of an important Federal Reserve Board regulation, Regulation T.

If you use unsettled sale proceeds to make a new purchase in a cash-based trading account, selling the newly purchased shares prior to the settlement of those sale proceeds would result in a violation, referred to as a "free-ride.”

If you want to sell the newly purchased shares prior to the settlement date of the sale proceeds used, you can avoid a free-ride violation by depositing enough funds into your account to cover the amount of the original purchase by the settlement date of that purchase. If there are any prior shares purchased with unsettled funds, you must also deposit enough to cover those purchases, in addition to the purchases of the specific security you are trying to sell. Any method of deposit will be accepted. However, the deposit must be credited to your account by the settlement date of the purchase you wish to sell.

Any free-ride violation will result in a notation being placed on your Scottrade account. There is no fee or monetary penalty for such violations. You will receive a warning letter for a first and second violation advising you of the regulation and possible restrictions if further violations occur. A third violation will result in a 90-day restriction being placed on your account. A restricted account is not permitted to make purchases using unsettled sale proceeds. An ongoing pattern of violations could result in the account being permanently restricted or closed.

Please let us know if you have any additional questions or concerns.

Sincerely,

Rich B.

National Service Center | Scottrade, Inc.

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