In a Cash account, your buying power may be less than your available cash due to two main factors: unsettled trades and the free riding rule.
Unsettled Trades
- When you sell securities, the proceeds are not immediately available for trading.
- US stock trades settle on the next business day following the trade transaction (T+1).
- Until the settlement is complete, the proceeds from the sale are not included in your buying power.
- New opening orders in Cash accounts only allow trading using the settled cash balance, unlike margin accounts which may allow trading with unsettled funds.
Free Riding Rule
- This rule restricts trading to fully settled funds if a position is closed before its trade settlement date.
- It is implemented to prevent the practice of buying and selling securities before paying for them with settled funds.
- IBKR's implementation of the Free Riding rule uses an end of day check to see if a position was closed prior to its opening trade settlement date.
- To place new orders, your Available Funds (ELV - Initial Margin) should be positive, representing fully settled cash after a closing trade.
To view settlement dates and other trade details in your Trade Confirmation Report:
- Log in to Client Portal
- Navigate to Performance & Reports followed by Statements
- Click Run (arrow icon) next to Trade Confirmation
- Choose the desired Date and Language
- Click View/Download, as desired
Please Note
- In a Cash account, your buying power is equal to your settled cash balance. This differs from margin accounts, which may offer additional buying power based on the value of your securities.
Additional Information