Cash Account Robinhood: US Accounts, Taxes & Rules (PDT Rule) Explained
- Felix La Spina
- Nov 21
- 5 min read
Cash Account Robinhood: US Accounts, Taxes & Rules (PDT Rule) Explained
Quick Answer
A cash account on Robinhood allows you to trade using only settled cash — and it is not subject to the Pattern Day Trading (PDT) Rule.
Yes, you can buy and sell a stock in the same day using a cash account on Robinhood, as long as you have settled cash available. This is one of the main reasons beginners prefer cash accounts.
If you’re wondering “what is day trading?”, it simply means buying and selling the same stock, ETF, or option within the same trading day.
This article explains how cash accounts work on Robinhood, how PDT applies, and the most important rules beginners must follow.
What Is a Cash Account on Robinhood?
A cash account is the simplest type of brokerage account on Robinhood.
✔ Key Features of a Cash Account:
You trade using cash only
No margin, no borrowing
No PDT rule
Limited by settlement time (T+2 for stocks)
Very beginner-friendly
This means you cannot trade with unsettled funds or use leverage — but you are protected from the strict limitations that margin accounts face.
Robinhood overview: https://robinhood.com/us/en/support/articles/your-account-types-on-robinhood/
Why Some Traders Prefer a Robinhood Cash Account
A cash account is ideal for beginners learning stock trading because:
✔ No $25,000 PDT requirement
✔ No risk of triggering a 90-day lockout
✔ Easier to control risk
✔ You can still day trade — with limits
✔ Perfect for small accounts
This makes the cash account one of the safest ways to learn intraday strategies without accidentally violating FINRA rules.
Can You Buy and Sell a Stock in the Same Day?
Short answer: YES — you can buy and sell the same stock in the same day using a cash account on Robinhood.
This is allowed because the PDT rule applies only to margin accounts, not cash accounts.
However, you must understand one key limitation:
🔸 You can only trade using settled cash
Stock trades settle on a T+2 schedule (trade date plus two business days).
Example:
You sell a stock on Monday
The cash becomes fully settled on Wednesday
If you use unsettled funds to make same-day trades, you can trigger a Good Faith Violation (GFV).
Despite that, cash accounts allow the most freedom for new day traders.
What Is Day Trading?
Day trading means buying and selling the same security on the same trading day.
Examples:
Buy Apple at 9:45 AM → Sell at 2:10 PM
Short Tesla at 10:20 AM → Cover at 11:40 AM
FINRA definition of day trading: https://www.finra.org/investors/learn-to-invest/day-trading
Day trading includes:
Scalp trades
Quick momentum plays
Breakout/breakdown trades
Reversal plays
Morning volatility setups
Even in a cash account, these count as day trades — they just don’t trigger the PDT rule.
Cash Account Vs. Margin Account on Robinhood
For small account beginners, a cash account is usually the safest option.
Understanding Settlement: The Most Important Rule
Because cash accounts do not use margin, trades must follow settlement rules.
Stocks: T+2
Cash from a sale is usable only after 2 business days.
Options: T+1
Option sale proceeds settle the next business day.
If you violate settlement rules by trading with unsettled funds, you risk:
Good Faith Violations (GFVs)
Losing access to instant settlement features
Temporary trading restrictions
How Day Trading Works in a Robinhood Cash Account
Here’s what day trading looks like in a cash account:
✔ You CAN make unlimited same-day trades
✔ You CAN close positions whenever you want
❌ You CANNOT use unsettled money
❌ You CANNOT use margin or instant buying power
✔ You must track your settlement schedule
How to Start Day Trading on Robinhood (Beginner Steps)
If you want to learn how to do day trading safely, follow this guide.
Step 1 — Open a Cash Account
Choose “Cash Account” instead of “Margin” or “Robinhood Gold.”
Step 2 — Learn Market Basics
Before day trading real money, understand:
Order types
Chart patterns
Volume
Volatility
Stops and limits
Start with the Free Stock Market Course: https://www.stockeducation.com/courses/stock-education-free-course/
Step 3 — Identify Tradeable Stocks
Use tools to find:
High volume
Liquidity
Intraday volatility
News catalysts
Use the US Stock Screener with AI: https://www.stockeducation.com/us-stock-screener-with-ai/
Step 4 — Use the Right Strategy
Day traders often use:
Momentum trading
Breakout plays
Dip buys
Reversal strategies
Scalp trades
Learn setups through the AI-Powered Investing Course: https://www.stockeducation.com/courses/stock-education-ai-powered-investing-courses/
Step 5 — Manage Your Settlement
This is the key difference between cash and margin accounts.
Plan your trades around what will be settled today, tomorrow, and the next day.
Step 6 — Track Your Progress
Use the AI Portfolio Learning Tracker to measure performance: https://www.stockeducation.com/ai-portfolio-learning-tracker/
PDT Rule Explained (Why It Doesn’t Apply to Cash Accounts)
The Pattern Day Trader (PDT) rule applies ONLY to margin accounts and requires:
At least $25,000 in the account
To avoid a 90-day restriction
When placing 4+ day trades within 5 business days
Because cash accounts do not borrow money, the PDT rule does NOT apply.
This is why many Robinhood users switch to cash mode to avoid PDT limitations.
U.S. Taxes for Robinhood Cash Accounts
Even though the PDT rule doesn’t apply, day trading is still taxable.
1. Short-Term Capital Gains
Any trade you hold for less than 1 year is taxed as ordinary income.
2. Wash Sale Rule
If you buy and sell the same stock within 30 days at a loss, you may not be able to claim the loss.
3. High Activity = More Taxable Events
Even cash account day trades must be reported.
Always consult a qualified tax professional.
Tools Useful for Cash Account Day Traders
StockEducation provides multiple tools to help day traders:
⚡ AI New Stock Analyzer
Check a company’s valuation, financial strength, and risk. https://www.stockeducation.com/ai-new-stock-analyzer/
📈 Advanced Charts
Analyze patterns, candles, and intraday movements. https://www.stockeducation.com/advance-charts/
🧮 ROI Calculator
Estimate potential day-trade profits. https://www.stockeducation.com/roi-calculator/
📊 ETF Overlap & Fee Drag Tool
Helpful for ETF traders. https://www.stockeducation.com/etf-overlap-and-fee-drag/
Pros & Cons of a Robinhood Cash Account
✔ Pros:
No PDT rule
Great for beginners
No margin risk
Simpler rules
More freedom for small accounts
❌ Cons:
Limited by settlement time
No leverage
Slower trading volume if cash is tied up
Paid & Free Learning Resources
✔ Free Stock Market Course (Beginner Friendly)https://www.stockeducation.com/courses/stock-education-free-course/
✔ AI-Powered Investing Course (Advanced Training)https://www.stockeducation.com/courses/stock-education-ai-powered-investing-courses/
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