Lesson 04 · Getting Started
Your account type and your country decide what you’re actually allowed to do. Here’s the fast version — no fluff.
TL;DR
• Cash account: trade with your own settled money. Simple, low-risk.
• Margin account: borrow to trade bigger. More power, more risk, more rules.
• Rules depend on your country — US rules don’t apply everywhere.
Cash vs. margin at a glance
| Cash account | Margin account | |
|---|---|---|
| What it is | Trade only your deposited cash | Borrow from your broker to trade larger |
| Buying power | Your balance | Multiples of your balance |
| Main risk | Limited to what you put in | Can lose more than you deposited |
| Key rule | Wait for funds to settle | Keep minimum equity + meet margin calls |
| Best for | Beginners building skill | Experienced, funded traders |
Reality check: more buying power isn’t more skill. Prove you can trade profitably with cash before you ever touch margin.
The rules that actually catch people
In a cash account (US)
- Settlement is T+1 — cash from a sale is available the next business day.
- Sell something before you’ve paid for it with settled cash and you risk a “good faith” or “free-riding” violation — which can freeze your account.
- Fix: only trade with settled funds and you’re fine.
In a margin account (US)
- You need a minimum of $2,000 equity to trade on margin (your broker may set a higher “house” requirement).
- Day trading is watched through intraday margin. Fall short and you have a margin deficit to clear fast.
- Repeatedly failing to cover deficits can get your margin trading frozen for 90 days.
The $25,000 pattern day trader rule is gone. FINRA replaced it with the intraday margin requirements above, effective June 4, 2026. Brokers have until October 20, 2027 to switch and can keep counting day trades until then. Schwab and E*TRADE switched in June 2026; ask your broker which system your account is on. Cash accounts were never covered by the PDT rule, and the settlement rules above still apply to them.
Rules change. Margin and day-trading requirements are set by regulators and updated over time, and brokers add their own limits. Always confirm the current numbers with your broker before funding.
Where you trade changes everything
Strictest, but deepest access
- Margin day trading carries the tightest requirements and monitoring.
- Widest choice of brokers and the best small-cap tools.
- Under-funded? A cash account is the practical starting point.
No US-style day-trade minimum
- Canadian brokers follow their own regulator (CIRO) — the US day-trading rules don’t apply.
- You can trade actively without the US margin thresholds.
- Trade-offs: often higher commissions and fewer specialised small-cap tools.
Depends on your regulator
- US settlement and margin rules don’t apply outside the US — your country’s regulator and your broker set the terms.
- Before funding, confirm the broker is properly regulated and that it accepts clients from your country.
Picking your broker
The best broker depends on where you live and how you trade — so we keep living, up-to-date comparisons instead of one fixed list:
- Compare fees, account types and rules in our broker reviews.
- Match it with the right scanners and platforms.
An honest word on risk: margin increases the size of both outcomes, not just the good one, and account rules such as the PDT threshold differ by country and change over time. Most retail day traders lose money overall. Nothing here is financial advice — check the rules that actually apply to your account rather than assuming.
Keep learning
With the right account open, the next job is finding something worth trading. The next lesson builds a scanner that filters the whole market down to the few names worth watching today.
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