Same-Day Stock Trading for Fidelity Youth account
Summary of User’s Concern and Solutions Discussed:
- The user is concerned about the potential penalties for selling stocks on the same day due to having a minor account.
- It is clarified that while buying and selling on the same day is allowed, doing so without settled funds can lead to a good faith violation.
- To avoid violations, the user should wait for the stock’s settlement period (T+2 days for stocks, T+1 day for mutual funds) before making new purchases unless using settled cash.
- Users are advised to monitor their “Settled Cash” balance to determine what is available for trading without incurring violations.
Here’s the full thread
Hey i just wanted to know how long i have to wait to sell a stock because i have a minor account? I heard you can get penalties or something like that for selling on the same day, is that true?
Hey @El Mencho! While you are able to buy and sell stock on the same day, there are a few things to keep in mind if you plan to do this in type cash within an account. Frequent trading in type cash, where the margin feature is not enabled/being utilized, can result in cash trading violations. Most commonly, a good faith violation may occur when a customer buys a security and sell it before paying for the initial purchase in full with settled funds. Selling an investment before it was ever paid for with settled funds is considered a good faith violation because it’s viewed as the customer not making an attempt to deposit the required cash prior to the settlement date of the trade. Please keep in mind stocks have a settlement period of the trade date plus 2 business days (T+2), and most mutual funds have a settlement period of the trade date plus 1 business day (T+1).
Learn more about good faith violations and other potential cash account restrictions here: https://www.fidelity.com/learning-center/trading-investing/trading/avoiding-cash-trading-violations
Let us know if you have further questions on this!
So i can sell and buy stocks on the same day? But i just would have to wait about 2 days right to buy another one?
Always check “Settled Cash” in your Balance details. This is what you have available to use without violations.
Please correct me if wrong. I am pretty sure this is right.
Yes. A good faith violation occurs when you buy a security and sell it before paying for the initial purchase in full with settled funds. Only cash or the sales proceeds of fully paid for securities qualify as “settled funds.” A violation can also occur by liquidating a position before it was ever paid for with settled funds because no good faith effort was made to deposit additional cash into the account prior to the settlement date. While it’s best to watch out for and avoid violations on your own, our system will try to warn you on the trade preview screen, when possible, if your transaction risks a GFV.🟢
Thanks for sharing; you’re correct. Settled cash is the portion of your cash (Core) balance that represents the number of securities you can buy and sell in a cash account without creating a Good Faith Violation. This amount includes proceeds from transactions settling today minus unsettled buy transactions, short equity proceeds settling today, and the intraday exercisable value of options positions.🟢