I've made my way through this thread, and I find it enlightening. I am going to rehash parts of this thread in my own words in hopes of 1) bringing some added clarity to the issue and 2) seeing how badly I have mangled it all up. So, if anyone sees any errors, let me know.
When we are interested in which rules we need to follow, we must first consider what kind of account we have. In analogy, just as we will play by a different set of rules for checkers than for chess, so too do we need to consider the rules that apply to us depending on what kind of account we have. If we are using a cash account, we need not concern ourselves of the rules specific only to margin accounts; moreover, if we are using a margin account, there’s no need to worry about rules that apply only to cash accounts.
Suppose I use (and only use) a cash account. If that is the case, then I have no need (no need at all) to worry about rules that apply to those with margin accounts, but because (supposedly still) I have decided to play in a cash account, it behooves me to learn and follow the rules that apply specifically to cash accounts.
Do I care (even a little) about whether or not I’m flagged as a pattern day trader? Apparently not, for no person operating out of a cash account is bound by such rules; thus, so what (I exclaim) that I day trade in my cash account! The rules do not disallow it (so far as I can tell). Awe, but as I have no need to worry about that, that is not to say I have no worries at all, for I nevertheless need to play by the rules that do in fact apply to me.
As a short-term stock trader that occasionally day trades with a cash account, I must remain diligent in pursuit of ensuring that I do not cheat the cabby out his fare--take rides for free.
Therefore (as I aim to not be guilty of taking free rides), I will make every effort to buy only with settled funds, funds that take three days to settle—yes three, for recall, I am stock trader, not an options trader. Ooh, but confusion is abound (!), for some say that what I must worry about is selling (selling, I say) with unsettled funds.
That’s right, but interestingly enough, the case is such that I may not sell if I bought what I did with unsettled funds, but lo and behold, how in the world did it ever come to be that I was even able to buy with unsettled funds!!!
If I understand this correctly, then yes, we may not sell if what we bought was bought with unsettled funds (not without repercussions, at least), but does that (and that alone) mean that I should worry? Not necessarily. Not all men are willing to protect their significant others of the dangers that lurk nearby, and so too it seems to be the case that not all brokers are willing to protect their clients with cash accounts from inadvertently buying stocks with unsettled funds.
Several brokers have been mentioned in this thread. If you know which brokers do (and of course, which do not) allow clients to purchase stock with unsettled funds, please speak up. For example, if you use a cash account at Zecco, and if they do not allow the purchase of stock with unsettled funds, then let us know; likewise, if you use a cash account at Zecco, and if they do allow the purchase of stock with unsettled funds, then let us know.
I haven’t covered everything, and I certainly left out a great deal by not addressing those with margin accounts, but I didn’t want to post too lengthy of a post.
Anyhoots, I hope it’s clear, but most of all, I hope it’s accurate.
With kindest regards, I am and remain,