Transfer Fund to Scottrade Brokerage Account Is Easy
The stock is down pretty badly so far today. For some investors, this is an opportunity to buy stocks at a better price, given that the market was down four out of the six trading sessions. Suppose that you see a stock that you have wanted to buy and today it finally reaches the price you want, can you buy it right away with your broker if you don’t have the money ready and have to transfer the fund from your bank account to your brokerage account to make the purchase?
I have a bunch of brokerages accounts myself. Though I no longer actively use every one of them now, I did try every one in the past to make a trade. And from my experience, transferring fund from my bank account to the brokerage account and using the money to purchase the stock I want on the same day is NOT possible at other brokers except Scottrade. As far as I know, brokers like TradeKing, Firstrade, and Zecco are all having electronic fund transfer (ACH) as an option to fund the account. However, the ACH fund transfer all requires a period of holding times, from 3 to 5 business days. This means that you have to wait 3 or 5 business days for the fund to be cleared before you can use it to buy the stock today at today’s price. But even 3 business days later, the price may not be acceptable anymore.
When it comes to funding the brokerage account, Scottrade is quite unique, in the sense the the money transferred from bank to broker account can be used to trade stocks almost instantly. The system it uses, called Money Direct, is also an ACH system like what other brokers use (meaning that you have to follow the same procedure to setup the Money Direct as you do with ACH: bank routing number, your account number, etc.). However, with Money Direct, fund is available almost immediately and can be used to buy stocks that are priced $4 or more. This is one restriction on using the fund to buy stocks in cash account. If you have a margin account and want to use the fund to satisfy margin sell letter, then you will have to wait for 3 business days, or if you want to buy stocks that are below $4.
Early this year, I bought quite some cheap stocks through Scottrade and most of the time, I had to use Money Direct to transfer money to the account first before making the purchase because I didn’t have the money in the account (I don’t want to have any significant amount of money in the account). It was impossible with other brokers.
Another reason why I trade with Scottrade
BTW, if you decided to open a Scottrade account, use promo code KGKP0724 to get 3 commission free trades.
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