What is a cash account?

You deposit $5,000. You can buy up to $5,000 of stock and no more. If you buy 50 shares at $100, you have $0 left to spend until you sell something or add money.

In a margin account the broker could lend you more, so the same $5,000 might buy up to $10,000 of stock. A 10% fall would then cost you $1,000, which is 20% of your own money.

Every JagSim account is a cash account that starts with $100,000 of virtual money. There is no margin, no leverage and no short selling, and you can sell only shares or coins you hold. Buying power is your cash less the cash set aside for open buy orders. One difference from a real account: sales settle at once on JagSim, so the cash from a sale can be spent straight away. How trading works on JagSim.

In a cash account you cannot lose more than you deposit, because you never borrow. With margin, gains and losses are both larger than your own money, and a fall can leave you owing the broker.

What is the difference between a cash account and a margin account?

A cash account buys only with your own money. A margin account lets you borrow from the broker against your holdings, which allows larger positions and short selling, and larger losses.

Can I day trade in a cash account?

Yes. The pattern day trader rule applies to margin accounts. In a real cash account the limit is settled cash: buying with unsettled cash and selling before it settles can be a good-faith violation. JagSim does not apply either rule.

When does cash from a sale settle?

In the US, most stock trades settle one business day after the trade, known as T+1. On JagSim the cash is available at once.

Why does JagSim use a cash account?

It keeps practice close to how most people start: you trade what you have, and every gain or loss is on your own $100,000.