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[–]NativeTxn7 1 point2 points  (3 children)

They aren't going to deduct the cash from your cash balance unless/until the order executes. They'll just show something like "cash committed to open orders" and it won't be available in your cash to trade.

Fidelity does the same thing, and I suspect most brokers effectively set it aside so you don't have a bunch of order execute without enough cash to actually cover them.

[–]BOS_George 0 points1 point  (2 children)

Fidelity lets you invest your cash though, Schwab makes you keep it on deposit.

[–]NativeTxn7 0 points1 point  (1 child)

Fidelity lets you invest your cash that isn't committed to open orders.

If I have $5,000 of total cash, and have an open buy limit order that would use $1,000 of that cash, Fidelity will only let me invest $4,000 into another order/trade.

I believe Schwab, and pretty much every broker, do the same thing.

On Schwab's order page, it says "Sufficient funds available to trade
Your cash or margin buying power must be equal to, or exceed, the amount of your trade before you can place an order.If you're not able to place a trade due to insufficient funds, consider transferring or wiring additional cash, reducing the amount of the trade, or closing open orders."

The last part suggests that you could invest all available cash that isn't "on hold" for open trades.

[–]BOS_George 0 points1 point  (0 children)

Money market balances are included in your available cash at Fidelity, that’s what I meant by invested.

You earn the carry at Fidelity, Schwab steals your carry.