The "Cash Up Front" restriction is a trading limitation imposed on certain accounts at Interactive Brokers (IBKR). This restriction affects your trading in several important ways:
- Trading with Settled Funds Only:
- When your Cash type account is under the "Cash Up Front" restriction, you can only place new orders using fully settled funds. This means you must wait for the settlement of previous trades before using those funds for new trades.
- Total Cash Value vs. Available Funds:
- Your Total Cash Value includes both settled and unsettled funds.
- However, for placing new orders, you need to focus on your Available Funds, which represents your fully settled cash after accounting for any open positions.
- Placing New Orders:
- You can place a new order in your Cash account only when your Available Funds (calculated as Excess Liquidity Value - Initial Margin) is positive. This positive value indicates that you have fully settled cash available after accounting for your current positions and any applicable margin requirements such as when a Cash account holds a short naked Put.
- Real-Time Credit Check:
- IBKR performs a real-time check for fully settled cash at the Credit Check step when you attempt to enter a new order. This ensures that you are only trading with settled funds as per the restriction.
Note
- This restriction can significantly impact your trading flexibility, as it limits your ability to immediately reinvest funds from recent sales or to use unsettled funds for new positions.
- Always monitor your Available Funds closely to understand your current trading capacity under this restriction.