If you have a cash account, settled funds refer to two types of funds:
1. Newly deposited funds
2. Funds settled from your sale transactions.
Unsettled funds may be used to open new positions but closing positions with unsettled funds may result in Good-Faith Violation.
Unsettled funds refer to proceeds from the sale of fully paid for settled securities prior to settlement date.
For example:
On Jan 1, you deposited $1,000 via wire transfer, and purchased 10 shares of ABC stock at $100/share.
On the same day, you sold all 10 shares of ABC at $120/share and received $1,200 total sale proceeds. Then the sale proceeds of $1,200 will be settled on Jan 2. Prior to Jan 2, these $1,200 would be considered as “unsettled funds”.
Please note, all dates mentioned above or included are assumed to be trading days.
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