I did spend time to read online info about it, but I still don’t know if the following scenario is considered as Free Riding violation. I can’t simply try it because I don’t want my trading capacity to be freezed for another 90 days:
On Day T, I sold stocks A, B and C (which were bought weeks ago). If I use the proceeds of the sales to buy back stock A, C and buy stock F on the same day, or on T+1. would these actions considered a violation? Of course I am aware that I have to wait for another 2 days before re-selling the shares of A, C and F to not violate the rule
Why would you sell stock A and C and buy it again on the same day or one day later? This makes no sense and only incurs unnecessary transaction costs.
Most probably you will not be qualified as a professional investor just by violating one of the 5 criteria, often you need to violate 2 criteria, but it is up to the tax office to decide. Also selling stocks and buying again doesn’t violate the criteria, selling stocks that you bought less than 6 months ago violates the criteria.
My guess is that you can use settled cash to do whatever you want. Examples at Free Riding Rule | IB Knowledge Base kind-of hint at that by mentioning that you can avoid the violation by depositing funds even after the purchase with unsettled cash.
But I’m not doing any of that, just my interpretation…