Offtopic: Stock trading, does anyone avoid the 3 day settlement rule?

I have used those funds before (maybe 2-3 times) but it did say on the website a while back that they could cancel my transaction and nullify it

Scottrade is what I use

I'm not a day trader but I think that answer really depends on the circumstance.

Do you feel there is a security that is time sensitive that you purchase immediately and doing so will yield a profit?

I have a book on options but still haven't read it. Too busy working and visiting strip clubs. I thought I read the settlement time was one day on one of those.

I just believe I could increase my profits a lot if I didn't have to keep waiting for settlement. Although this year I've been doing fairly good ignoring the market until something interesting pops up.

Just get a margin account. If you trade frequently waiting on those settlements will drive you batty. Also there really isn't any disadvantage to have a margin account (beyond some minimal account balance that you need to maintain, but even if it falls below that it will just become a cash account). If you have the minimal balance you should be automatically approved.

Options have a 1 day settlement.

Thanks Dougster. I'll check into it.

I assumed OP had a margin account but wasn't sure if he should use it?

I don't know anyone who day trades seriously that doesn't have a margin account. some day to day volatility in certain stocks can make you some nice fast returns (anyone remember MDBX recently? I think it's back to otc now lol)

I wasn't using margin but apparently those requirements are pretty low. I'm trying to avoid day trading since I didn't set anything up for that.

I have never been an active trader.....no time for it. Day trading requires constant attention to an overwhelming data stream.

However, in my own way, I am an active equity investor. Occasionally I will write covered calls on a long term position that I am holding. If the stock is called away I am usually able to buy it back at a favourable price later. I prefer this to limit orders.

I don't mess around with the short side of the market or with puts. That is for guys with more time than I possess to spend monitoring the market. Twice in my life I have used a stop loss order. Both times were a disaster for me.

As many others have noted, a margin account is required.

If the settlement period is a worry you really shouldn't be in the market at all.

^^^ think that is an overstatement. Depends how frequently he trades. If it's daily or even every few days, settlement periods can be annoying.

If you meant that he should not be trading money he needs for normal activities then I agree - keep some in a regular bank account for that.

My only concern with settlement is violating sec rules and having my account restricted. As is I end up waiting at least 3 days before I getI into another stock trade, sometimes a whole lot longer if I see no good stock trade. I usually only watch a small handful of stocks maybe at lunch and the evening and I made myself a rule to never buy a stock I can't sell first thing in the morning without violating the rules.

I'm only thinking about two relatively small accounts I just set up this year. Been making trades for years though. I tend to go all in on the smaller accounts on a single trade to make it worthwhile. I'm up about 15 to 18% this year in my smallest account. I only made less than a handful of trades this year. Trying to learn about new things to improve things. I believe I could be doing better. I would have jumped into another stock trade today but did not. Funds aren't settled.

only up 12 percent, less in other accounts. Waiting for funds to settle and see if the trade set up I saw tonight is still there Tommorrow. Actually I am pleased with 12 % but I believe I could do better. I like to be able to set stop losses in case things do not go as planned.

@sharkhunter,

Always remember the hoary old adage about stock market traders:

'Bulls make money. Bears make money. Pigs get slaughtered.'

That's why I'm doing so good this year. I'm doing short term trades only. Not getting greedy. I know of someone doing a whole lot better than me and others who are making thousands per trade.

volatity has been so slow this year, the 3 day rule hasn't hardly interfered with me making any trades. My smallest account can't have margin. I use shorter term technical indicators for short term trades plus another indicator. ok, thanks for the comments.

U don't want too be greedy...or u will be drinking cheap scotch from the dirty linoleum floor

been 100 % cash most of the year except for a few days.

If you trade options the funds are available as soon as you close a trade. With eqities, at my brokerage firm the funds are available the next day. If you occaisional day trades, in and out same day, you can get flagged as a pattern day trader. If have open and close trades in the same day 4 times in 5 business day period you will be flagged. At that point you have to maintain a $25,000 balance to trade.

With options if you close a trade for a profit and pump that profit into a new trade you will get a margin call asking for additional funds to cover the portion of the trade that was new money. Like if you had a 2,000 balance and then closed a trade for a $500 profit and the imediately entered a $2,400 trade, you would get a $400 margin call.

I use eOption and have 200-300 trades each year.