Navigating Webull: Understanding and Managing Good Faith Violations (GFVs) - How Long Do They REALLY Last?
Hello fellow traders! Are you a Webull user who's just encountered the dreaded "Good Faith Violation" or are you simply trying to understand the rules of the road to avoid future headaches? Either way, you've come to the right place! Good Faith Violations (GFVs) can seem confusing and, frankly, a bit scary when you first encounter them. But don't worry, we're going to break down exactly what they are, how they work on Webull, and most importantly, how long they stick around. Let's get started and demystify the world of GFVs!
Step 1: What Exactly IS a Good Faith Violation (GFV)? (Engage User Here!)
Alright, let's kick things off with a simple question: Have you ever sold a stock and then immediately used the proceeds to buy another stock, only to find out those funds weren't "fully ready"? If so, you've likely experienced the core concept behind a Good Faith Violation (GFV)!
In the simplest terms, a GFV occurs in a cash account when you:
Purchase securities using unsettled funds (money from a recent sale that hasn't officially cleared yet).
Then, you sell those newly purchased securities before the original funds used to buy them have settled.
Think of it like this: You sell your old bicycle for cash. You immediately use that cash to buy a new skateboard. But before the person who bought your bicycle actually pays you the money, you decide to sell the skateboard to someone else. The "good faith" is violated because you effectively traded with money that wasn't fully yours yet.
Why does this matter? Because in the world of stock trading, all transactions have a settlement period. This is the time it takes for funds from a sale to officially clear and become "settled cash" in your account. For most stocks, ETFs, and options, the settlement period is Trade Date + 1 business day (T+1). This means if you sell on Monday, the funds typically settle on Tuesday.
Step 2: Understanding Settled vs. Unsettled Funds
Before we dive into how long GFVs last, it's crucial to grasp the difference between settled and unsettled funds. This is the cornerstone of avoiding violations.
2.1: Settled Funds: Your Ready-to-Go Cash
Settled funds are cash that is fully available in your account. This includes money you've deposited and funds from sales that have completed their settlement period.
You can use settled funds to buy new securities, withdraw them, or transfer them without any risk of a GFV. They are, quite simply, your money.
2.2: Unsettled Funds: The Temporary Placeholder
Unsettled funds are the proceeds from a security sale that have not yet completed the T+1 (or T+2 for some older rules, though T+1 is now standard for most equities) settlement period.
Webull, like many brokers, offers instant buying power with unsettled funds. This means you can use the proceeds from a sale to buy another security before the original sale has settled. This is a convenience, but it comes with a catch.
The GFV trap lies in using this instant buying power and then selling the new security before the initial funds have settled.
Step 3: The GFV Lifespan on Webull: How Long Does It Really Last?
Now for the main event: how long does a Good Faith Violation truly impact your Webull account?
A Good Faith Violation (GFV) remains on your Webull account for a rolling 12-month period.
This means that if you incur a GFV today, July 1, 2025, that specific GFV will "expire" and no longer count towards your GFV tally on July 1, 2026. It's a rolling window, so the oldest GFV drops off as new ones are added, or as they simply age out.
However, the consequences of accumulating multiple GFVs within this 12-month window are where the real restrictions kick in.
Step 4: The Escalating Consequences of Multiple GFVs
While a single GFV might just be a warning, accumulating them can lead to progressively stricter limitations on your trading activity. Webull, adhering to regulatory guidelines, implements these restrictions to ensure proper fund management.
4.1: The First Few Strikes: Warning Shots
1st and 2nd GFV: Typically, these are warnings. You might receive a notification from Webull, but your ability to trade with unsettled funds might not be immediately impacted. Consider these your learning opportunities!
4.2: The Third Strike: Settled Funds Only
3rd GFV within a 12-month period: This is where the game changes. Your Webull cash account will be restricted to purchasing securities only with settled funds. This restriction typically lasts for 90 calendar days.
What does this mean for you? You can no longer use instant buying power from recent sales. If you sell a stock on Monday, you'll need to wait until Tuesday (when the funds settle) to use that money to buy another stock.
4.3: The Fourth Strike: Extended Settled Funds Only
4th GFV within a 12-month period: Similar to the third, your account will remain restricted to settled funds only. This restriction can last for the remainder of the 12-month rolling period from your first GFV, or for a minimum of 90 days from the date of the 4th GFV, whichever is longer. This is a serious restriction designed to prevent further violations.
4.4: The Fifth Strike: The Severe 90-Day Sell-Only Restriction
5th GFV within a 12-month period: This is the most severe consequence for a cash account. Your Webull account will be placed under a 90-day "sell-only" restriction.
What does this mean for you? You will not be able to place any new buy orders for 90 calendar days. You can only sell existing positions. This is a significant setback for active traders and highlights the importance of avoiding multiple GFVs.
Step 5: How to Avoid Good Faith Violations on Webull
Prevention is always better than cure! Here are concrete steps you can take to steer clear of GFVs:
5.1: Prioritize Settled Funds for Purchases
Always wait for your funds to settle before using them for new purchases, especially if you plan to sell those newly bought securities quickly.
Check your "Settled Cash" balance in the Webull app. This is the amount you can truly trade with without GFV risk.
5.2: Understand the T+1 Settlement Rule
Remember that stock, ETF, and options trades generally settle on T+1 (Trade Date + 1 business day). Plan your trades accordingly.
If you buy a stock on Monday, and the funds used to buy it are from a sale that occurred on Monday, don't sell that new stock before Tuesday's market open (when the original funds would have settled).
5.3: Keep an Eye on Your Balances
Regularly monitor your "Cash Available for Withdrawal" or "Settled Cash" balance on Webull. This will give you the clearest picture of funds that are safe to use for new purchases without GFV risk.
Webull often provides warnings or notifications if you are about to make a trade that could result in a GFV. Pay attention to these alerts!
5.4: Consider a Margin Account (If Eligible and Understand the Risks)
For active traders who frequently buy and sell securities, a margin account can help avoid GFVs because you're essentially borrowing funds from the broker.
However, margin accounts come with significant risks, including the potential to lose more than your initial investment and margin calls. This is not a recommendation for everyone and requires a thorough understanding of margin trading.
5.5: Fund Your Account Sufficiently
The simplest way to avoid GFVs is to ensure you always have enough settled cash in your account to cover your purchases. If you're buying a stock for $1000, make sure you have at least $1000 in settled cash before placing the order.
Step 6: What to Do If You Get a GFV
It happens to the best of us! If you find yourself with a GFV on Webull:
6.1: Don't Panic!
A single GFV isn't the end of the world. Learn from it and adjust your trading habits.
6.2: Review Your Trade History
Go back and look at the specific trades that triggered the GFV. Understanding why it happened is key to preventing future occurrences.
6.3: Monitor Your GFV Count
Keep track of how many GFVs you have within the rolling 12-month period. This will help you anticipate potential restrictions.
6.4: Plan Future Trades Carefully
For a while, err on the side of caution. Assume all funds are unsettled until they are explicitly shown as "settled" in your account.
Frequently Asked Questions about Webull GFVs
How to Check My GFV Count on Webull?
You can usually find your GFV count or any active restrictions by navigating to your account details or a "violations" section within the Webull app. If you're unsure, contact Webull's customer support.
How to Avoid GFV When Day Trading on Webull?
The best way to avoid GFVs when day trading is to either use a margin account (with full understanding of the risks) or ensure you have a large enough settled cash balance to cover all your day trades without needing to rely on unsettled funds.
How to Resolve a GFV on Webull?
You don't "resolve" an individual GFV; they simply expire after 12 months. The key is to avoid incurring more GFVs by following the rules regarding settled funds. If your account is restricted, the restriction will lift after the specified period (e.g., 90 days).
How to Know if Funds Are Settled on Webull?
Webull's app will typically show you your "Settled Cash" or "Cash Available for Withdrawal" balance. This is the reliable indicator of settled funds. Unsettled funds are usually part of your "Cash Available for Trading" but not "Cash Available for Withdrawal."
How to Prevent a 90-Day Restriction on Webull?
To prevent a 90-day restriction, ensure you do not incur three or more Good Faith Violations within any rolling 12-month period. Strictly adhere to trading with settled funds, especially after your first GFV.
How to Get a Margin Account on Webull to Avoid GFVs?
To get a margin account on Webull, you typically need to apply for it through the app. There are eligibility requirements, including minimum account equity ($2,000 for a basic margin account). Be sure to fully understand margin risks before applying.
How to Use Webull Effectively with Cash Account and Avoid GFVs?
Plan your trades, understand settlement times (T+1), and only use your "Settled Cash" balance for new purchases if you intend to sell quickly. If you sell a stock, wait for those funds to settle before using them to buy another stock that you might also sell quickly.
How to Understand the Difference Between GFV and Free Riding on Webull?
While related, a Good Faith Violation (GFV) is about selling a security purchased with unsettled funds before those funds settle. A Free Riding violation occurs when you purchase securities and then sell them to cover the initial purchase because you didn't have sufficient funds in your account to begin with. GFVs generally involve using proceeds from a sale that haven't settled, while Free Riding is about failing to pay for a purchase.
How to Track Settlement Dates for My Trades on Webull?
While Webull might not explicitly show a "settlement date" for every individual transaction, knowing the T+1 rule is crucial. If you sold Stock A on Monday, the funds from Stock A will settle on Tuesday. If you then bought Stock B with those unsettled funds on Monday, you cannot sell Stock B until after Stock A's funds have settled (i.e., not until Tuesday).
How to Contact Webull Support for GFV Questions?
You can typically contact Webull support through their in-app chat, email, or by phone. It's always best to reach out to them directly if you have specific questions about your account or a GFV notice.
