Cash Account¶
A cash account is a brokerage account in which every security purchase must be funded with fully settled cash. No borrowing against margin is permitted, meaning there is no leverage, no margin loan, and no margin call. Cash accounts are governed by Federal Reserve Regulation T and FINRA cash-account rules.
HOW IT WORKS¶
Buying power in a cash account is limited to settled cash only. Under the current T+1 settlement cycle, proceeds from a sale become available for new purchases one business day after the trade. Using unsettled proceeds to fund a new purchase, then selling that new position before the original proceeds settle, constitutes a good faith violation. Three good faith violations within a rolling 12-month period restrict the account to settled-cash-only trading for 90 days. Freeriding — buying a security using proceeds of a sale that has not yet settled — triggers an immediate 90-day freeze under Regulation T. Cash accounts cannot short sell, as shorting requires borrowing shares through a margin account. Defined-risk options strategies such as long calls, debit spreads, and cash-secured puts are permitted; naked options are not. The pattern day trader rule and its $25,000 minimum equity requirement apply only to margin accounts, not cash accounts.
IN TAPEBOARD¶
Tapeboard's paper trading simulator enforces T+1 settlement mechanics, so positions run in a cash account reflect realistic settled-cash constraints. Traders testing strategies under the $25,000 pattern day trader threshold can verify that each round trip recycles capital correctly before deploying live capital. The account balance panel distinguishes settled from unsettled cash, making good faith violation risk visible in real time.