gary, if you use unsettled funds you get a warning it would be a "free ride" if selling before the funds clear.
Obviously there is more here than just be careful?
any advice? don't do it?
From Scott
Unsettled proceeds from existing long positions can be used to purchase additional securities as long as the new purchase is not sold prior to the settlement date of the original sale that generated the proceeds used to finance the purchase.
If it is sold prior to the settlement date of the funding sale without additional funds being deposited, it will be considered a free ride under Federal Reserve Regulation T.
For example, if you sell a security on Monday the 1st, you can use the proceeds to make a purchase prior to the settlement date of Thursday the 4th. However, if you make a purchase before Thursday the 4th then sell that new position before the settlement of Monday's sale, you will then be required to deposit funds to pay for the purchase. If you purchase on Thursday the 4th, you may place a sell order at any time you wish, because the purchase was made with settled funds.
