So I’m new to short-term trading and I just incurred my first Good Faith violation. I sold a losing stock and then with part of that money I bought a stock on which I set a trailing stop loss for 10%. This triggered later in the day and sold at a profit, though I actually didn’t want to exit this particular stock so soon so I bought back in at a slightly lower price.
In order to handle these short term trades, do I need to make sure that I always have some settled cash that’s uninvested at all times? And also why does this restriction even exist, if I sell there’s an immediate record of how much I sold for and what my new balance is before buying a new stock.
