What is good-faith violation?Good Faith Violation (GFV)
In a cash account, buying shares with unsettled sale proceeds and then selling the new shares before that money settles. After a few violations within 12 months, the account can only buy with settled cash.
Learn “good-faith violation” in an animated lesson
- US Stock RulesThe PDT Rule: Limits on Day Trades
A margin account that makes 4 or more day trades in any 5 trading days is flagged as a PDT and needs at least $25,000 in account equity to keep going.
- US Stock RulesT+1 Settlement and Cash Accounts
US stocks bought today can be sold today, and the cash and shares settle on the next trading day; in a cash account, buying with unsettled money and then selling is a “good faith violation”.
Related terms
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Go to “The PDT Rule: Limits on Day Trades”