How will I know if I am committing a Good Faith Violation?
Last updated March 28, 2025
A simple way to know if you are going to get a Good Faith Violation is this:
Let's say you sold Jumia shares of $300 then used $100 from this money to buy Apple shares and went on to buy $200 of Amazon shares.
Now you want to sell your Apple shares. Is the $300 from the Jumia sale still in your unsettled cash? If it is, then you will get a Good Faith Violation if you sell the Apple shares.
If you sell a stock, you cannot use the money from that sale to buy another stock immediately. You will have to wait for 1 business day. After that, you can use the money from the sale to buy another stock or withdraw it. After 90 days, you will be able to go back to using the money from sales to buy another stock immediately instead of waiting for 1 business day.