Been using Fidelity for a few months now and keep seeing this “settled cash” thing pop up. Sometimes it shows different amounts than what I think I have available.
Made a few trades last week and noticed I couldn’t use all my cash right away. Is this normal? Just want to make sure I understand how this works before I mess something up.
Fidelity shows settled cash so you don’t accidentally trigger trading violations. When you sell stocks, those funds are tied up for two days.
This threw me off initially. You can trade with unsettled funds, but if you sell before the cash settles, you’ll get hit with a good faith violation.
Three strikes and you’re restricted for 90 days. Better to just wait it out.
Cash usually settles after 2 business days. It’s normal to wait.
Use settled cash to avoid good faith violations. Stock sales take 2 business days to clear (T+2). If you don’t wait for funds to settle, you’ll get hit with a 90-day restriction.
Settled cash is the money you can use for trading immediately. Normally, when you sell stocks, it takes up to two business days for that amount to settle. Until it does, that money is considered unsettled, and you won’t be able to use it in cash accounts. If you try to buy with unsettled cash and sell it before it settles, you risk triggering a good faith violation. Accumulate three violations and you face a 90-day trading restriction. Always verify your settled cash balance before making any trades.
Learned this the hard way when I got my first good faith violation last year.
Sold some AAPL shares and immediately bought into another position with that cash. When I needed to exit quickly the next day, boom - violation notice.
Now I always check my settled cash before making moves. Those two days feel like forever when you see a good setup.