No, a blocked period (in the financial world) has nothing to do with fallopian tubes. But if you're curious, uh...ask your parents.
A blocked period is the length of time during which you can’t access money in your trading account or stocks that you may have put up as collateral.
Perhaps you have misbehaved in some fashion, such as buying stocks and not having the funds to complete the trade, which is called freeriding. Day traders who obviously do a lot of trading might be required to have a certain amount of money in their account at all times, and if they go below that amount the account is blocked. This is especially true for pattern day traders, who buy and sell stocks while borrowing using margin accounts more than a few times a week.
Other naughty investors with a cash account get blocked for as much as 90 days if they keep buying shares when they have not yet received the funds from a previous trade. Then they can only buy stock with completely settled cash.
Let’s say Johnny Hot Shot sells 20 shares of Can’t Lose, Inc. for $30 a share, for total proceeds of $600. He expects the funds to arrive in his account any day now, but meanwhile spots a great deal to buy 10 shares of Facemagazine at $50 a share.
Unfortunately, the $600 hasn’t arrived yet when it comes time to pay for the Facemagazine purchase, so his account gets blocked.
Related or Semi-related Video
Finance: What is liquidity preference?27 Views
finance a la shmoop. what is liquidity preference?
yeah well liquidity is a good thing you want it. being liquid means that you have
cash which gives you options to you know buy stuff. and yeah even the Amazon River [money leaves a wallet in the grocery store]
shops at Amazon. all right so if your flavor of
investment has a liquidity preference over someone else's then your investment
all else being equal is preferable. see the liquidity preference . specifically if
you have liquidity preference and usually this is found in the form of
early stage of venture capital investor term sheets for investing in companies
in the form of convertible preferred stock- like it converts into common at
the IPO or something like that- then you get paid before everyone else
gets paid -at least in this form of stock- if the company gets sold.
all right well technically that is, but the company is sold and your convertible
preferred hasn't converted into common shares yet this company didn't go public. [convertible stock made into common stock]
but so like let's think about the example where if the company raised
twelve million bucks in preferred stock, which all had a liquidity preference
over and above common ,and then the whole company was sold for just fifteen
million dollars. well then those with liquidity preference would get liquid
first .ie they get their twelve million bucks. then the remaining three million
would be sprinkled around everyone else who was do the dough. plus any dividends
or accrued assets that have come our way otherwise. and yes technically debt
holders get paid ahead of the various series preferred investors who then get [list of who gets paid first]
paid ahead of the common shareholder but that's a different video. all right so
when it comes down to it you want to have liquidity preference. clearly I
prefer to be liquid myself. [man floats in lake in an inner tube]
Up Next
What is collateral? Any type of asset or property that a borrower pledges as security for a loan is classified as collateral. As the lender has a c...
What is liquidity? Think: water. It's liquid. It can be squeezed into little, tiny spaces and infused into large spaces. A defining trait of liquid...
A liquid market is a market featuring high trading volumes, i.e. investors actually want to put their cash to work.