What is a Good Faith Violation and how can I avoid it?

Good faith violations (GFV) occur when you sell a security purchased with unsettled funds prior to settlement.

To help you avoid this, we will release your option sales proceeds to your available balance on the business day following a sale. Although stock trades take 2 business days to settle, we will release your stock sales proceeds the following day as well.

There are several ways you can avoid incurring a GFV:

• Only place trades up to the settled cash amount in your account
• Don’t sell the position you bought on unsettled funds until the original trade settles
• Deposit funds to cover the cost of the newly purchased position

Please note, if you receive 3 GFVs in a 12-month period, your account will be restricted from trading for 90 days.