Used as collateral, cash upfront trading requires you to pre-fund your account before you can start trading. Usually, this type of account has lower commission fees since your purchased stocks are held by the brokerage firm. Cash account trading, on the other hand, doesn’t require prepayment. It makes use of the available cash in the fund. This means you can only trade when there’s enough capital in your account. Without sufficient funds, you won’t be able to enter a trade transaction.