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Learning to Invest / Terms, Definitions, & Jargon


Subject:  Re: Free riding Date:  3/12/2004  4:57 PM
Author:  FoolishTyro Number:  1328 of 2244

I've never heard the term "free riding" myself, but I can explain a little about the whole "unsettled proceeds" part.

If you sell a stock today in which you had $10,000 in, those funds would be moved to the cash portion of your account. However, just because it sits within the cash portion of your account does not mean that you can use it yet because it takes time for those funds to "settle." Those funds are settled when you receive payment by the settlement date (Schwab's definition).

Ameritrade must have been letting people buy other securites before funds from sells had been paid. Hope this helps.

...who needs a trade to settle already!...
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