I have been trading for a while, but I still get confused about settled cash and cash available to trade.
Sometimes they show different amounts on my dashboard. I made mistakes before thinking I had more buying power.
Is there a real difference between these two? I want to understand this better.
Important to know about settled cash. It is what you have after transactions finish. The available cash can show higher numbers sometimes because it includes unsettled trades. Using unsettled funds can lead to restrictions. Always check your settled cash before trading.
Made this exact mistake last month when I thought I had $800 to work with but only $500 was actually settled.
Ended up getting a good faith violation because I used unsettled funds from a previous trade. Cost me three days of restricted trading.
Now I always wait for settlement before opening new positions.
Settled cash is what you have after transactions are complete. Cash available to trade includes settled cash plus any margin or funds from unsettled trades. For example, you might see $1000 available but only have $600 settled. The extra $400 may come from a stock sale that’s still processing or margin. It is best to trade only with settled cash to avoid confusion and potential issues with your account.
Difference matters a lot. Once lost $200 thinking I had settled funds.
Two main differences:
• Timing - settled cash cleared T+2, available cash includes pending trades
• Risk - trading unsettled funds can trigger good faith violations
Stick to settled cash when calculating position sizes.