FAQ - Most Common Questions
When will my deposited funds be available for trading?
Funds transferred in through electronic ACH have a 3-business day hold on the funds upon effective date which is a day after submitting the request. This hold is for non-marginable securities (over-the-counter stocks, options, futures, forex, etc.). The funds can be used right away for fully marginable securities (generally stocks that are on a stock exchange such as NYSE or NASDAQ).
This is the same for deposited checks, but the hold time is 4 business days from when the check posts to your account.
What is a “Pattern Day Trader”?
A pattern day trader’s (PDT) account is a margin account that has executed more than three roundtrips in a five-business day period. PDT accounts must maintain a day trading minimum equity of $25,000 on any day on which day trading occurs. The $25,000 account-value minimum is a start-of-day value, calculated using the previous trading day's closing prices on positions held overnight. Day trade equity consists of marginable, non-marginable positions, and cash. Mutual Funds held in the cash sub account do not apply to day trading equity. Also, funds held in the Futures or Forex sub-accounts do not apply to day trading equity. To avoid an account restriction, pattern day-trader accounts that fall below the $25,000 minimum equity requirement should not day trade.
Are cash accounts subject to Pattern Day Trading rules?
No. Cash accounts are not subject to Pattern Day Trading rules and as such you would not need to use the day trade counting tools in Thinkorswim.
What happens if I execute more than three roundtrips in a rolling 5 business day period with an account value less than $25,000?
An account that is both A) Flagged as a Pattern Day Trader and B) has less than $25,000 equity will be issued a Day Trade Minimum Equity Call (“EM Call”). The Call does not have to be met with funding, but while in the Call the account should not make any Day Trades. If a Day Trade is made while in the Call the account will be set to Restricted - Closing Only.
My account is now flagged as a pattern day trading account and its value is less than $25,000 what can I do?
We have multiple potential solutions to help with this:
- We can assist with making a deposit/transfer to the account to bring its value to at least the $25,000 minimum.
- Cash accounts are not subject to pattern day trading rules. We can assist you with converting a margin account to a cash account, but the cash account would be subject to settlement on each trade placed. (See “In my cash account, when can I use my funds again to trade?” above).
- We can review your account to see if a day trade flag removal is available on your account.
In my cash account, when can I use my funds again to trade?
Cash account settlement procedures are governed by Federal Regulation T. Reg T states that funds from investments that you sell won't be available to put toward another purchase until the first transaction settles. Reg T settlement times are T+2 (trading day plus two business days) for stock trades and T+1 for options. So, if you bought XYZ on Monday and then sold it on Tuesday the funds wouldn't be available to put toward the purchase of ABC until Wednesday. (Monday, the day of the original purchase, plus two business days = Wednesday.)
In my cash account, when can I withdraw my funds used for trading?
If you want to withdraw the proceeds of a sale from your account, you would have to wait until settlement of the trade – 2 business days from the sale date. Using the example in the above question, the proceeds from the sale of XYZ would be available Thursday (Tuesday, the date of the sale, plus two business days.)
To avoid the settlement times to which Cash accounts are subject you could consider applying for Margin trading. Funds are available for purchase immediately in a Margin account. (Note: Margin accounts must adhere to Finra's Pattern Day Trading rule). Our Margin handbook can be accessed HERE.
Margin trading increases risk of loss and includes the possibility of a forced sale if account equity drops below required levels. Margin is not available in all account types. Margin trading privileges subject to TD Ameritrade review and approval. Carefully review the Margin Handbook and Margin Disclosure Document for more details. Please see our website or contact TD Ameritrade at 800-669-3900 for copies.
What is a good faith funding violation?
Good faith violations occur when clients buy and sell securities before paying for the initial purchases in full with settled funds. Only cash or proceeds from a sale are considered settled funds. Here’s an example of a good-faith violation:
- On Monday, Janet holds $10,000 worth of XYZ.
- On Tuesday, Janet sells her entire XYZ position for $10,500, which will settle Thursday.
- Wednesday morning, Janet buys $10,500 of FAHN on good faith that XYZ’s sale will settle.
- Wednesday afternoon, Janet sells FAHN for $11,000, making a $500 profit. However, FAHN’s original purchase wasn’t fully paid for because XYZ’s sale hadn’t yet settled.
If this happens three times in a 12-month period, a client will be restricted to trading with settled cash for 90 days.
How can I see my completely settled funds before placing a trade?
Looking at cash available for withdrawal will show you the fully settled funds in your account. Login to www.tdameritrade.com and go to my account>deposits/transfers>withdraw>transfer from your bank. On the right hand side of the screen it will show a number for cash available for withdrawal. If you are using the thinkorswim mobile app this information can be found under more>transfers>to/from bank account.
What are the requirements to get approved for futures trading?
To apply for futures trading approval, your account must have:
- Margin approval
- Advanced Features enabled
- Tier 2 or 3 options approval
- An account minimum of $1,500 is required for margin accounts.
- A minimum net liquidation value (NLV) of $25,000 to trade futures in an IRA. Only SEP, Roth, traditional, and rollover IRAs are eligible for futures trading.
- Additionally, IRA accounts must maintain a minimum net liquidation value (NLV) of $25,000 to trade futures. Only SEP, Roth, traditional, and rollover IRAs are eligible for futures trading.
Please keep in mind that not all clients will qualify, and meeting all requirements doesn't guarantee approval.
If you'd like more information about requirements or to ensure you have the required settings or permissions on your account, contact us at 866-839-1100.
How do I apply for futures approval?
Visit tdameritrade.com and log in to your account. Go to Client Services > My Profile > General. Under Elections & Routing, look for Futures, and click Apply.
How can I trade in the pre/post market?
In order for a trade to be eligible to work in the pre or post market, the order needs to be entered as a limit order. In addition the TIF (time in force) needs to be changed from a day order to either ext or gtc_ext. ext orders will work from 6 am to 7 pm central time for 1 trading day.
Standard gtc_ext orders will work from 6 am to 7 pm central time for 180 trading days, or until the order fills. This is most commonly found in over the counter stocks, as well as options which do not trade in the extended hours.
My short option finished out of the money at expiration, is it guaranteed to expire worthless?
Not necessarily. On the day of expiration long option holders have until 4 pm central time, 4:30 best efforts to put in contrarian instructions (such as exercising an option that officially finished out of the money based on the 3 pm central closing price, or putting in a do not exercise on an option that finished in the money). Therefore, there is still risk of being assigned on short options, even if they officially finish out of the money based on the 3 pm central closing price. That is one of the reasons why there is no commission charge for closing out single leg short options for 5 cents or less.
How do I trade in the extended session?
To place trades in the pre and post market, you will need to use a LIMIT order and change the TIF (time in force) to EXT (day plus extended session) or GTC_EXT (good til canceled plus extended session).
Only securities listed on the NASDAQ & NYSE exchanges are eligible for extended session trading. Pre-market hours are from 7am – 9:28am EST. After market is from 4:02pm – 8pm EST.
We do offer 24 hour trading on select securities, and for those orders you will need to use a Limit order and change the TIF (Time in Force) of the order to EXTO (24 hour session for one full day) or GTC_EXTO (24 hour session that is also good til canceled). These orders are 24 hour continuous orders that expire at 8 pm ET each day. You can find more information, including a list of the securities offered in this session, here.
What does Limit Up mean?
Limit Up is a term used in futures trading. It refers to the maximum increase allowed in one trading day on a specific contract. One important thing to note, if a contract goes limit up, it does continue to trade, it just cannot go above the limit up price.
Example: For the S&P 500, Russell 2000, Dow Jones Industrial Average, and Nasdaq 100 Index futures, during non US trading hours (5 PM to 8:30 am Central Time) (5 PM to 8:30 am Central Time) Limit Up is set at 7%, based off of the 3 pm central time futures fixing price. During that time, if the /ES, or /MES goes up 7% from the 3 pm central fixing futures price, limit up rules will be in effect. The contract will continue to trade, but cannot be traded higher than the limit up price, until US trading hours open at 8:30 am central time.
What does Limit Down mean?
Limit Down is a term used in futures trading. It refers to the maximum decline allowed in one trading day on a specific contract. One important thing to note, if a contract goes limit down, it does continue to trade, it just cannot go below the limit down price.
Example: For the S&P 500, Russell 2000, Dow Jones Industrial Average, and Nasdaq 100 Index futures, during non US trading hours (5 PM to 8:30 am Central Time) Limit Down is set at 7%, based off of the 3 pm central time futures fixing price. During that time, if the /ES, or /MES goes 7% down from the 3 pm central fixing futures price, limit down rules will be in effect. The contract will continue to trade, but cannot be traded lower than the limit down price, until US trading hours open at 8:30 am central time.
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