Stock Trading Using Margin… Any Tips?Suggestions?Advise?
I have ten gran in stocks but want to use margin to get to 20K (i’m not sure if this is possible)
Yes, it is possible. You generally have to apply through your brokerage and state your occupation and salary just in case so they know.
Buying on Margin is more risky since you are borrowing. Be sure to check your brokerage’s interest rates and their margin requirements and when they might do a margin call.
If you do get into trouble, I would advise selling your stock before raising more cash for your account.
Comments
I’d advise not to use margin trading unless you’ve really done your homework. It’s very risky, about like gambling in a casino. The reason is that at any time you could be called on your margin and lose much more money than you would if you’d just played the stocks regularly. My grandfather lost everything playing margins.
That said, you can research the ins and outs of margin trading at any good investment website, like The Motley Fool. Here’s one of their articles on margin trading: http://www.fool.com/eveningnews/foth/1999/foth990203.htm
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With stocks you can borrow up to 50% of your cash account (sometimes even a 100%) but all stocks must be above $5 mark. I wouldn’t advise it because moves are amplified and anything that is moving against you will hurt a lot.
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Expirience
April 1st, 2010 at 3:58 am
Yes, it is possible. You generally have to apply through your brokerage and state your occupation and salary just in case so they know.
Buying on Margin is more risky since you are borrowing. Be sure to check your brokerage’s interest rates and their margin requirements and when they might do a margin call.
If you do get into trouble, I would advise selling your stock before raising more cash for your account.
References :