Could someone please clarify the following for me:
Imagine I have zero (0) in my cash account and make a sale today (order is executed immediately). I understand there's 3 days before settlement, hence 3 days until this money becomes available.
Is it possible for me to place a buy transaction on the same day, on the assumption that when this transaction is to settle, the funds will be available?
Does this make sense?
I guess I'm questioning the timing of the cash moving in/out of the account and how this becomes available for trading.
:confused:
Hope that doesn't sound dumb.
ctp6360
9th-May-2006, 06:19 AM
Hi AFLGuy,
I don't think that's a dumb question, I think its very confusing how a lot of the brokers organise their settlements and I really wish they would make it more clear when you sign up. For instance with the National bank they'll happily take the funds immediately out of your account when you buy something, but when you sell the money literally DISAPPEARS from both accounts for 4-5 days before magically re-appearing.
ANYWAY, I have a feeling eTrade works on a T+3 system, which basically means that no matter what you do, buy or sell, the money won't move for 3 days. So if you buy something today you don't need to have the money in your account for 3 business days, and likewise if you sell the money won't turn up for 3 days.
So to answer your question, yes, you can make a trade on the same day on the assumption that the funds will be there. If my understanding is correct they will just deposit the difference in transactions in your account.
clowboy
9th-May-2006, 08:25 AM
ALFguy,
I am not too sure how etrade works on a "cash account" basis as my etrade account is traded via a margin loan. My account however works on the priciple that if I sell something then I can imediatly purchase another stock with the funds (as I said though, it is linked to margin account and not cash account).
I would assume that in order to have something to sell you at one stage purchased some stocks (unless you transfered them). In which case you could look at your account histories to determine how it has worked in the past.
Best Idea is to ring there help line (or use the 24 online help assistant) and confirm it with them so that you are 100% sure.
visual
9th-May-2006, 08:43 AM
To trade with etrade,you need to have money on your account to cover the trade and they will only take the money on the day it settles,in the mean time they pay a good interest rate,and as for buying at the same time as your sell yes you can.
websman
9th-May-2006, 08:48 AM
I use ETrade, but I've never really given this much thought. I have margin available, but I usually stick to trading with cash.
kaveman
9th-May-2006, 09:45 AM
Etrade uses the cash in your account as well as any pending sells
so you can make a purchase if you have money in the T+3 pending
Cash=0
pendingT+3 sale = $10,000
you can purchase up to $10k of new shares
ALFguy
9th-May-2006, 09:56 AM
Etrade uses the cash in your account as well as any pending sells
so you can make a purchase if you have money in the T+3 pending
Cash=0
pendingT+3 sale = $10,000
you can purchase up to $10k of new shares
Excellent, thanks guys, this really clears things up!
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