Online traders no longer wait for the check from a stock sale to arrive in the mail. Just close out a trade and the proceeds are instantly credited to your trading account. But traders hoping to immediately transfer the proceeds to a bank account must contend with the mandatory three-day wait as your broker complies with Regulation T.
Log into your online brokerage account and open your trading window. Review your current stock holdings and select the positions you feel are ready to close out. If you have not done so already, make sure you have linked your bank account with your trading account. You will not be allowed to transfer money until your brokerage firm verifies the bank account ownership.Step 2
Open a chart window and enter the first stock symbol on your potential close list. Use indicators to help determine if the trend is stalling or if the stock still has room to rise. Scan the headlines, news events and company announcements for anything that might affect the stock’s value. Take all factors into account before making a decision.Step 3
Go to your order entry window and enter the stock symbol, the number of shares and the action to close the position. Use a market order to immediately close the trade or enter a limit order if you think the market will give you a better fill price. After receiving the trade completion notice, check your account balance to ensure the proceeds have been credited to your account.Step 4
Wait the mandatory three days before initiating a funds transfer to your bank account. All trading firms must follow Regulation T, enacted by the Securities and Exchange Commission, which mandates a three-day waiting period. During this time, you are not allowed to use those proceeds to open a new trade or move the funds from one account to another. Many brokerage firms have a software program in place that automatically freezes the proceeds for three days.Step 5
Transfer the funds from your trading account to your bank account by ACH bank transfer or wire transfer once the three days have passed. Be sure you enter your account numbers accurately. If the funds are still frozen, contact your broker to get the issue resolved.
Items you will need
- Online stock trading account
- ACH bank transfers take about three days to complete. If you need your money immediately, use a wire transfer to receive your funds the same day.
- The SEC enacted Regulation T to prevent free-riding. Traders were using their cash accounts as margin accounts by buying shares and selling them two or three days later. They paid for the shares with the sale proceeds instead of paying for the shares when purchased. Cash traders caught free-riding can count on their account being frozen for 90 days.
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