In a cash account, there are several reasons why your funds may not be immediately available for trading:
- Settlement Period:
- Funds from a sale are not immediately available due to the settlement period.
- Most securities have a T+2 settlement cycle (trade date plus two business days).
- Free Riding Rule:
- If you close a position before the opening trade settles, you may encounter trading restrictions.
- This is how IBKR checks for a Free Riding violation.
- An end-of-day check is performed to detect if a position was closed prior to its trade settlement date.
- Cash Up Front Restriction:
- If a Free Riding violation is detected, your account is automatically put into a "Cash Up Front" restriction for 90 days.
- During this period, you can only place new orders using fully settled funds.
To check if you have fully settled funds available for trading:
- Look at your Available Funds (ELV - Initial Margin) in your account.
- If this value is positive, it represents your fully settled cash available for trading after a closing trade.
A real-time check for fully settled cash is performed during the Credit Check when entering a new order.
Note
- The restrictions are in place to comply with regulations and maintain proper account management. If you find yourself under a Cash Up Front restriction, you'll need to wait for your funds to fully settle before using them for new trades, or wait for the 90-day restriction period to end.
Additional Information
- Free Riding Rule in the IBKR Knowledge Base.
- US Federal Reserve Margin Supplemental "Free Riding" Rules on the electronic Code of Federal Regulations website.