Cash Liquidation Violations are less common on Public, but let’s walk through it.
This is easier to explain by jumping straight into an example:
Let’s say that on Monday, you buy Stock A for $100.
On Tuesday, you realize you don’t have $100 in cash available, and sell $150 worth of Stock B – which is fully settled – in order to cover the cost of buying Stock A.
Why is this bad?
This is a problem because you bought Stock A without actually having enough settled funds to complete the purchase, and the funds from selling Stock B won’t settle in time to pay for it.
What happens if I mess up?
If you get more than 3 Cash Liquidation Violations within a 12 month period, your Public account will be restricted for 90 days. Again, this is really a “Safe Mode” where you’ll only be able to sell stock, or purchase stock with fully settled funds.
How do I avoid this?
This is actually relatively hard to do with your Public account, but it can happen. Just make sure you don’t spend more money than you have in your account when purchasing stocks.
If you ever have questions, the team is always here for you, so feel free to give us a shout on the app’s Live Chat or via email at firstname.lastname@example.org! 😁