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Cash Trading

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Dictionary Says

Definition of 'Cash Trading'

A method of buying or selling securities by providing the capital needed to fund the transaction without relying on the use of margin. Cash trading is achieved by using a cash account, which is a type of brokerage account that requires the investor to pay for securities within two days from when the purchase is made.
Investopedia Says

Investopedia explains 'Cash Trading'

Cash trading is unlike margin trading because the account holder cannot borrow money from the broker to fund the transaction. Cash trading involves less risk than margin trading, because risk is limited to only the cash invested.

Related Definitions

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    Cash Account

    A regular brokerage account in which the customer is required by Regulation T to pay for securities within two days of when a purchase is made.
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  • Margin Account

    A brokerage account in which the broker lends the customer cash to purchase securities. The loan in the account is collateralized by the securities and cash. If the value of the stock ...
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  • Margin

    1. Borrowed money that is used to purchase securities. This practice is referred to as "buying on margin". 2. The amount of equity contributed by a customer as a percentage of the ...
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    • Leverage

      1. The use of various financial instruments or borrowed capital, such as margin, to increase the potential return of an investment. 2. The amount of debt used to finance a firm's assets. ...
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