You can still place trades even if your account has incurred a free riding violation, but there are important considerations to keep in mind:
- Sufficient Settled Funds: The key requirement is that you must have sufficient settled funds in your account to enter new opening orders. Free riding violations typically occur when you buy and sell a security before paying for the initial purchase with settled funds, so ensuring you have settled funds is crucial.
- Check Available Funds: Before placing any trades, always verify your 'Current Available Funds'. After being flagged for Free Riding, your Available Funds represents your Settled Cash and the amount you can use for new orders.
- Monitor Buying Power: In addition to available funds, pay attention to your account's 'Buying Power'. This indicates the maximum amount you can use for purchases based on your account type and current holdings.
- Restrictions: Be aware that having a free riding violation may result in restrictions on your account, such as limiting you to only using settled funds for purchases for a certain period (typically 90 days). Even if the Cash account uses settled cash to open new positions, if a position is closed before the opening trade settles, then the 90 day period is extended from the closing trade date.
- Avoid Further Violations: While you can continue trading, it is important to be cautious and avoid additional violations. You can always close positions to manage market risk, but closing a position before the opening trade settles simply extends the 90 day restriction for using only fully settled cash for new orders in your IBKR Cash account.
- Understand Settlement Times: Familiarize yourself with settlement times for different types of securities to better manage your trades and avoid future violations. Trade settlement dates are in your Trade Confirmation report.
By adhering to these guidelines, you can continue to place trades while working to resolve the free riding violation and prevent future occurrences.