“free-ride” stock market?
So, I just sold a stock today that comprised of all my money and spent it all on another stock I had this hunch for. I know that the first stock won’t settle til Wednesday morning, I believe, but what if I really needed to sell my second stock? I’m having seconds thoughts about that hunch! I know that it’s considered a “free-ride” and that is not allowed. It would be my first time. I use Scottrade.
no, i’m not on a margin account. normally i just wait the 3 days for settlement but one time i went through the motions to sell, just to see what would happen and scottrade gave me a warning message to the effect that if i sold before the previous stock settled, it would be a free-ride but it asked if i still wanted to trade. of course i hit no.
it’s not that i’m concerned. i know the rules. but i know people break the rules or find ways around it. so, if i do it once and never again, then all i should really get is a warning?
slap on the wrist?
To add on to the previous answer: I use scottrade and have free-rode once before. You do get a mandatory 90 day restriction. You can trade normally throughout the 90 days without any more free-riding.
The only course of action scottrade takes is:
They call you. If you don’t answer, they leave a message saying ‘call me back.’ If you do, I don’t know what they say- I didn’t answer.
They also leave a message in your account about the restriction. At the bottom you click ‘I have read this,’ then go to your account. Everything is normal.
As a small rant- I wish scottrade would put non-free ridable funds in ‘Total Funds Available for Trading.’ Obviously they are NOT available for trading. Either I’m reading it wrong, or they should really look into this.
London Underground – Central Line 1992 Stock ride (Perivale)
