sleepyhead
Active Member
My understanding is that the 3 day settlement also applies to when you buy. So if you sell on Monday you can buy on Tuesday - the sale cash will settle on Thursday and the buy will settle Friday and you're good...
I don't know what you are trying to say, but this is how it works:
If you buy something on Monday, the cash will not settle until Thursday. So you cannot sell until Thursday or you will incur a "good faith violation". If you do this 3 times over a 12 month period then you will not be able to buy stocks with unsettled funds.
So normally when you sell something on Monday, you can use that cash to buy stocks right away. But now that you are restricted to using settled cash only for purchases, you cannot buy stocks until Thursday.
So if you have three of these violations in a 12 month period then you are restricted to buying only with cash settled funds. Going to your example you will not be able to buy on Tuesday. You have to wait to Thursday to make a purchase. But since you bought with cash settled funds, you can sell this stock right away (but then will have to wait 3 days before buying something again).