Using a cash account can someone trade all day on it?
No, you cannot.  The cash settlement period will lock up your cash depending on the product you trade. Three business days for stocks, 1 business day for options, and you would need waaaaaay more than $5,000 to trade futures. According to Regulation T, you can make as many day trade (round trip) stock purchases using a cash account as long as you have the funds to cover each and every round trip sale. However, the funds generated from the sales cannot be used again to purchase new stocks until the settlement period (T-2 or T-3) is over. For example, say you have $10000 dollars in your cash account and no securities. You buy 1000 shares of XYZ stock in the morning at one dollar per share and you sell the stock 30 minutes later because it went up say by 50 cents. According to Regulation T, you cannot use the money generated from the sale of your 1000 shares until after the settlement date. However, you can use the remaining $9000 dollars in your account to execute other trades just as the first trade. You can do this as many times as you want as long as you have funds available to pay for the transaction the same day it's executed. The only thing to worry about and that isn't clear, is, what happens if you perform this action more than 3 times in a week? Does it mean that your cash account now becomes a margin account subject to margin account rules because you executed more than three round trip trades in a five day rolling period?
"TLDR:  Why can't banks give me my money? We don't have your money. Who has my money? About half a dozen different people all over the world. And we need to coordinate with them and their banks to get you your money. I love how everyone seems to think that the securities industry has super powers.  Believe me, even with T+3, you won't believe how many trades fail to settle properly.  Yes, your trade is pretty simple. But Cash Equity trades in general can be very complicated (for the layman).  Your sell order will have been pushed onto an algorithmic platform, aggregated with other sell order, and crossed with internal buy orders. The surplus would then be split out by the algo to try and get the best price based on ""orders"" on the market.  Finally the ""fills"" are used in settlement, which could potentially have been filled in multiple trades against multiple counterparties. In order to guarantee that the money can be in your account, we need 3 days. Also remember, we aren't JUST looking at your transaction. Each bank is looking to square off all the different trades between all their counter parties over a single day. Thousands of transactions/fills may have to be processed just for a single name. Finally because, there a many many transactions that do not settle automatically, our settlements team needs to co-ordinate with the other bank to make sure that you get your money. Bear in mind, banks being banks, we are working with systems that are older than I am. *And all of the above is the ""simplest"" case, I haven't even factored in Dark Pools/Block trades, auctions, pre/post-market trading sessions, Foreign Exchange, Derivatives, KYC/AML." I traded futures for a brief period in school using the BrokersXpress platform (now part of OptionsXpress, which is in turn now part of Charles Schwab). They had a virtual trading platform, and apparently still do, and it was excellent. Since my main account was enabled for futures, this carried over to the virtual account, so I could trade a whole range of futures, options, stocks, etc. I spoke with OptionsXpress, and you don't need to fund your acount to use the virtual trading platform. However, they will cancel your account after an arbitrary period of time if you don't log in every few days. According to their customer service, there is no inactivity fee on your main account if you don't fund it and make no trades. I also used Stock-Trak for a class and despite finding the occasional bug or website performance issue, it provided a good experience. I received a discount because I used it through an educational institution, and customer service was quite good (probably for the same reason), but I don't know if those same benefits would apply to an individual signing up for it.  I signed up for top10traders about seven years ago when I was in secondary school, and it's completely free. Unfortunately, you get what you pay for, and the interface was poorly designed and slow. Furthermore, at that time, there were no restrictions that limited the number of shares you could buy to the number of outstanding shares, so you could buy as many as you could afford, even if you exceeded the number that physically existed. While this isn't an issue for large companies, it meant you could earn a killing trading highly illiquid pink sheet stocks because you could purchase billions of shares of companies with only a few thousand shares actually outstanding. I don't know if these issues have been corrected or not, but at the time, I and several other users took advantage of these oversights to rack up hundreds of trillions of dollars in a matter of days, so if you want a realistic simulation, this isn't it.  Investopedia also has a stock simulator that I've heard positive things about, although I haven't used it personally. "If you're going to be a day trader, you really need to know your stuff.  It's risky, to say the least. One of the most important elements to being successful is having access to very fast data streams so that you can make moves quickly as trends stat to develop in the markets.  If you're planning on doing this using consumer-grade sites like eTrade, that's not a good idea.  The web systems of many of the retail brokerage firms are not good enough to give you data fast enough for you to make good, timely decisions or to be able to execute trades way that day traders do in order to make their money.  Many of those guys are living on very thin margins, sometimes just a few cents of movement one way or the other, so they make up for it with a large volume of trades. One of the reasons you were told you need a big chunk of money to day trade is that some firms will rent you out a ""desk"" and computer access to day trade through their systems if you're really serious about it.  They will require you to put up at least a minimum amount of money for this privilege, and $25k may not be too far out of the ballpark. If you've never done day trading before, be careful.  It doesn't take much to get caught looking the wrong way on a trade that you can't get out of without losing your shirt unless you're willing to hold on to the stock, which could be longer than a day. Day trading sounds very simple and easy, but it isn't.  You need to learn about how it works (a good book to read to understand this market is ""Flash Boys"" by Michael Lewis, besides being very entertaining), because it is a space filled with very sophisticated, well-funded firms and individuals who spend huge sums of money to gain miniscule advantages in the markets. Be careful, whatever you do.  And don't play in day trading with your retirement money or any other money you can't afford to walk away from. I hope this helps. Good luck!" If I buy 10 stocks on Monday and sell the same on Tuesday (different trading day) would I be considered a day trader? No. It is only counting if you buy something and then sell that same something during the same trading session. And that counter only lasts for 5 days, things that happened outside of that time period get removed from the counter. If the counter reaches a number (three to five, depending on the broker), then you are labelled as a pattern day trader, and will have your trading capabilities severely restricted unless you have an account size greater than $25,000 Not really practical... The real problem is getting the money into a form where you *can* invest it in something.  It's not like E\*Trade will let you FedEx them a briefcase of sequentially numbered hundreds and just credit your account, no questions asked.  That **is** the hard part. This can be done, you can be prosecuted for some forms of it, in any case there are more riskless ways of doing what you suggested. First, buying call options from market makers results in market makers buying shares at the same delta as the call option. (100 SHARES X DELTA = How many shares MM's bought). You can time this with the volume and depth of the shares market to get a bigger resulting move caused by your options purchase to get bigger quote changes in your option. So on expiration day you can be trade near at the money options back and forth between being out the money and in the money. You would exit the position into liquidity at a profit. The risk here is that you can be sitting on a big options position, where the commissions costs get really big, but you can spread this out amongst several options contracts. Second, you can again take advantage of market maker inefficiencies by getting your primary position (whether in the share market or options market) placed, and then your other position being a very large buy order a few levels below the best bid. Many market makers and algorithms will jump in front of your, they think they are being smart, but it will raise the best bid and likely make a few higher prints for the mark, raising the price of your call option. And eventually remove your large buy order. Again, you exit into liquidity. This is called spoofing. There have been some regulatory actions against people in doing this in the last few years. As for consequences, you need to put things into perspective. US capital market regulators have the most nuanced regulations and enforcement actions of worldwide capital market regulators, and even then they get criticized for being unable or unwilling to curb these practices. With that perspective American laws are basically a blueprint on what to do in 100 other country's stock exchanges, where the legislature has never gotten around to defining the same laws, the securities regulator is even more underfunded and toothless, and the markets more inefficient. Not advice, just reality. "You need to have 3 things if you are considering short-term trading (which I absolutely do not recommend): The ability to completely disconnect your emotions from your gains and losses (yes, even your gains but especially your losses). The winning/losing on a daily basis will cause you to start taking unnecessary risk in order to win again. If you can't disconnect your emotions, then this isn't the game for you.  The lowest possible trading costs to enter and exit a position. People will talk about 1% trading costs; that rule-of-thumb doesn't apply anymore. Personally, my trading costs are a total 13.9 basis points to enter and exit a $10,000 position and I think it's still too high (that's just a hair above one-eighth of 1% for you non-traders).  The ability to ""gut-check"" and exit a losing position FAST. Don't hesitate and don't hope for it to go up. GTFO. If you are serious about short-term trading then you must close all positions on a daily basis.  Don't do margin in today's market as many valuations are high and some industries are not trending as they have in the past. The leverage will kill you. It's not a question of ""if"", it's a when.  You're new. Don't trade anything larger than a $5,000 position, no matter what. Don't hold more than 10% of your portfolio in the same industry. Don't be afraid to sit on 50% cash or more for months at a time. Use money market funds to park cash because they are T+1 settlement and most firms will let you trade the stock without cash as long as you effect the money market trade on the same day since stock settlement is T+3." "My 401k allows cash holdings to 100% if desired. I'm not sure why some won't, they are making money on your money after all. If you are looking to the funds vehicles for investing suggestions however, they will never allow cash. I found you must go into ""Invest on my own"" vehicle to make that change.  I have beaten and timed this market several times by sitting with cash on the sidelines. The only time I missed it was when I talked to a fund administrator in 2008 dot com crash and stayed in at this suggestion. I told him I didn't see where the market could go much higher as I had made 12-28% on some funds. He was dead wrong of course and I lost 50% that year.  Now, trust me, in 2017, assets are grossly overvalued. If they won't let you deposit to cash, don't invest and just save your money until the next crash." You'll have to take cash from your Credit Card account and use that to trade. I doubt any brokerage house will take credit cards as it's trading without any collateral (since credit cards are an unsecured credit) There's no limitation on what you can invest in, including trading stocks (as long as trading is not a business activity, like day-trading or investing for others). You just need to make sure you have a tax ID (either ITIN or SSN) and pay taxes on all the gains and dividends. Also, consider your home country tax laws, since you're still tax resident in your home country (most likely). They are using several banks, hedge funds or other financial institutions, in order to diversify the risk inherent to the fact that the firm holding (a fraction of) their cash, can be insolvent which would makes them incur a really big loss. Also, the most available form of cash is very often reinvested everyday in overnight*products and any other highly liquid products, so that it can be available quickly if needed. Since they are aware that they are not likely to need all of their cash in one day, they also use longer terms or less liquid investments (bonds, stocks, etc..). "The difficulty is that you are thinking of a day as a natural unit of time.  For some securities the inventory decisions are less than a minute, for others, it can be months.  You could ask a similar question of ""why would a dealer hold cash?"" They are profit maximizing firms and, subject to a chosen risk level, will accept deals that are sufficiently profitable.  Consider a stock that averages 1,000 shares per day, but for which there is an order for 10,000 shares.  At a sufficient discount, the dealer would be crazy not to carry the order.   You are also assuming all orders are idiosyncratic.  Dividend reinvestment plans (DRIP) trigger planned purchases on a fixed day, usually by averaging them over a period such as 10 days.  The dealer slowly accumulates a position leading up to the date whenever it appears a good discount is available and fills the DRIP orders out of their own account.  The dealer tries to be careful not to disturb the market leading up to the date and allows the volume request to shift prices upward and then fills them." So ... how are you going to have a bank run if you got rid of cash? I suspect big investors will attempt (have already attempted?) to pull their cash, but regular people? Not like running to the ATM will do much good and I don't think they have offshore accounts.  Excuse my naïveté, but that's the first thing that came to my mind... Yes, you will need to create an actual account. However, when all is done and you are about to log in, there will be an option on whether you want to log in as a live trader or a paper trader. Select the paper trading option and log in and get rich off fake money. "....causes loses [sic] to others. Someone sells you a stock.  The seller receives cash.  You receive a stock certificate.  This doesn't imply a loss by either party especially if the seller sold the stock for more than his purchase price. A day trading robot can make money off of the price changes of a stock only if there are buyers and sellers of the stock at certain prices.  There are always two parties in any stock transaction: a buyer and a seller.  The day trading robot can make money off of an investment for 20 years and you could still make money if the investment goes up over the 20 years.  The day trading robot doesn't ""rob"" you of any profit."