Cash Balance
Cash balance is the amount of settled money sitting in your brokerage account, separate from the value of any stocks, options, or other positions you hold. If you deposited $10,000 and haven't spent any of it on trades, your cash balance is $10,000. Once you buy shares, that cash converts into a position, and your cash balance drops accordingly.
The tricky part is that "cash balance" is not always the same as "money available to trade" or "money available to withdraw." Brokers usually show several related numbers side by side: cash balance, buying power, and settled cash. Buying power can be higher than your actual cash if you have margin (borrowed funds) enabled, or lower than your stated cash balance if some of that cash hasn't finished settling yet from a recent stock sale.
Settlement is the process where a trade actually clears and ownership and money officially change hands; it doesn't happen the instant you click sell. Until settlement completes, the proceeds may show up in your cash balance but not be usable for certain purposes, like immediately withdrawing them or, in some account types, using them to buy again without restriction. This gap between "shows as cash" and "usable as cash" is where beginners get tripped up, especially in cash accounts versus margin accounts.
Cash balance can also go negative in a margin account if you've borrowed money to buy securities or if fees, interest, or a debit from options activity exceed your deposited cash. A negative cash balance isn't necessarily an emergency, but it means you owe the broker money and are typically paying interest on that amount.
This term depends on a rule or threshold that changes over time, so no specific figure is quoted here. The definition references settlement timing (how long it takes for trade proceeds to settle) and the distinction between cash and margin account rules around using unsettled funds. Specific settlement periods (e.g., T+1, T+2) and free-riding/good-faith-violation rules are set by SEC/FINRA and clearing conventions, which change over time. A human should confirm the current settlement cycle and any related account-restriction rules against current SEC/FINRA guidance or the broker's own disclosures before publishing specific timeframes.
Day traders live and die by knowing exactly how much settled, usable cash they have, because trading with unsettled funds or misreading buying power can trigger broker restrictions or unexpected margin calls mid-session.
You start the day with a $5,000 cash balance. You buy $2,000 of stock, leaving $3,000 cash and a $2,000 position. You sell that position for $2,200. Your cash balance now shows $5,200, but depending on your account type and broker, that $2,200 in proceeds may not be fully "settled" for a day or two, even though it appears in your balance immediately.
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