Settlement (T+1)
The day the trade actually closes and cash and shares change hands.
What is Settlement (T+1)?
Trade date is when the order executes; settlement date is when ownership and cash officially transfer. US equities settle one business day after the trade (T+1 as of May 2024). Settlement timing drives cash-account violations and dividend record dates.
Settlement (T+1): a worked example
Sell Monday, cash is available Tuesday.
More terms in Positions & Trade Mechanics
Long Position
You own the asset and profit when its price rises.
Short Position (Short Selling)
You borrow shares, sell them, and profit if the price falls.
Margin
Borrowing from your broker to buy securities, using the account as collateral.
Cash Account
An account where every purchase is paid for in full, no borrowing.
Leverage
Using borrowed money to increase exposure relative to your own capital.
Initial Margin (Reg T)
The equity you must put up to open a margin position - generally 50%.
Maintenance Margin
The minimum equity percentage you must keep in a margin account.
Margin Call
A demand to add cash or securities after equity falls below maintenance.