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Written by Sam Pennington on March 25, 2023
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Webull Good Faith Violation Explained In 2024

When it comes to investing in the stock market, it's important to understand the rules and regulations that govern cash accounts.

One such rule is the Good Faith Violation (GFV), which can occur when a cash account opens a position with unsettled funds and liquidates it before the settlement date.

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Settled vs Unsettled Funds

  • In a cash account, investors must pay the full amount for securities they purchased.
  • It's important for them to differentiate unsettled funds from settled funds.
  • Unsettled funds can be used to open a position, but investors should wait for the funds to be settled to close the position.

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What Is A Good Faith Violation?

A GFV occurs when a cash account opens a position with unsettled funds and liquidates it before the settlement date.

It's worth noting that no deposit or liquidation can lift a GFV.

Each GFV will automatically expire at the beginning of the 13th month since its trade day. This means that investors who have violated this rule in the past will need to be mindful of their trading activity for at least 12 months after the violation.

Webull, a popular online brokerage platform, enforces GFV rules for cash accounts:

  1. After three violations in 12 months, the account will be restricted to using settled cash only.
  2. After four violations, the account is restricted from trading for 90 days.
  3. After five violations, the account will be closed.

To avoid GFVs, investors should wait for their funds to settle before making any trades. They should also keep track of their unsettled funds and avoid using them to open positions.


In summary, GFVs are an important trading rule for cash accounts that investors need to be aware of.

Violating this rule can lead to restrictions or even the closure of the account.

To avoid GFVs, investors should wait for their funds to settle before making any trades and keep track of their unsettled funds. By following these rules, investors can ensure they are trading responsibly and avoiding any unnecessary penalties.

Don't forget to grab your free stock worth up to $200 from Robinhood today!

Article written by Sam Pennington
Sam is a personal finance writer. While in college, he dedicated his spare time to learning about personal finance, investing, and real estate. Sam currently works as a business analyst for one of the top food manufacturers in the world.

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