A cash account (also referred to as a Type 1 account) means just what you think it means. You must deposit a sum of money along with the new account application to begin trading. The amount of your initial deposit varies from broker to broker. Some broker have minimum of $10000 while others let you open an account for as little as $500. Once in a while you may see a broker offering cash accounts with no minimum deposit, usually as part of a promotion. Qualifying for a cash account is usually easy as long as you have cash and a pulse.
With a cash account, your money has to be desposited in the account before the closing (or settlement) date for any trade you make. The closing occurs three business days after the date you make the trade (the date of execution). You may be required to have the money in the account even before the date of execution.
In other words, if you call your broker on Monday , October 10 and other 50 shares of cashless cop. At $20 per share, then on thursday, October 13, you better have $1000 in cash sitting in your account. Otherwise the purchase does not go through.
If you have cash in a brokerage account see whether the broker will pay you interest on the uninvested cash in it. Some offer a service in which uninvested money earns money market rates and you can even make a choice about whether the venue is a regular money market account or tax-free municipal money market account.
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