Account Types: Cash vs Margin & Option Levels

Level: Intermediate · About 15 min · 6 slides

Your account type decides what you can trade and how fast you can reuse your money. Cash accounts use settled funds (trades settle T+1). Margin accounts borrow from your broker. In 2026 FINRA replaced the old Pattern Day Trader / $25K rule with new intraday margin standards. Options approval levels are set by each broker; we show Webull's as an example.

🔑 Key takeaways

• Cash account: trade with settled funds. Stock trades settle T+1 (since May 28, 2024).
• Selling before a purchase is paid with settled funds can cause a good-faith violation.
• PDT / $25K is gone: FINRA's intraday margin standards replaced it (effective June 4, 2026; brokers phasing in until Oct 20, 2027).
• Margin magnifies gains and losses. Beginners: cash account and shares first.
• Options levels are set by each broker (FINRA Rule 2360). Webull's levels are just one example.

✅ Your homework

1. Find out whether your broker has switched to the new intraday margin rules yet.
2. Check which options level your account has, and what it allows.
3. Buy and sell in a paper cash account and watch when the funds settle.
4. Read FINRA Regulatory Notice 26-10's summary.

📎 Resources

• FINRA Regulatory Notice 26-10 (finra.org/rules-guidance/notices/26-10)
• SEC order approving the change: Rel. 34-105226 (sec.gov)
• Investor.gov: T+1 settlement bulletin
• FINRA Rule 2360 (options)
• ADT Academy: https://americandreamtradingacademy.com