Margin Vs Cash Account Day Handel Reddit

  • addendum: In my now horribly warped view this correction was much less violent than the one in June signalling the market is looking to establish a new bottom. Could very well form tomorrow (friday) and regain 2%-4% by 9/11 off stimulus and vaccine news. Never underestimate greed in the time of fear. That being said. I’m actually sitting here considering bag holding these calls since I’m already ‘pot committed’
  • Do you guys have any newsletters or websites that gives you a breakdown of the market and companies every day? Trying to find a resource that is trustworthy that makes evaluating all my options easier.
  • Is there a thread on here someone could direct me too that would essentially teach me some of the basics about investing?
  • I’m sick of sitting on the sidelines and it’s time for me to start understanding it and getting involved
  • For example. HCAP has a 34. 59% ($1. 920) dividend on Webull. When I check the internet. it shows a 5. 4% dividend ($0. 32) with the next one occurring on 12/29/2020 for $0. 16. This is the case for every stock I’ve checked on the list.
  • If I were to buy 20k worth of a stock in hopes of day trading it. do I have to already own “x” % of THAT SPECIFIC stock in order to trade more of THAT SPECIFIC STOCK on margin. or do I simply have to have a total amount of equity in my account all together to avoid a margin call?
  • How long are margin calls out for? Will they be called that day or do they sit there for longer periods of time?
  • Your margin balance/available funds fluctuate with the value of your overall portfolio or the overall balance of your cash?
  • No. margin is just a loan. if you have 20k and use 20k of margin you have 40k of total borrowing power. doesnt matter what stock. option etc you own. dont own.
  • 2 — if youre margin called you need to post collateral that day. almost all retail brokers will liquidate your positions if you do not meet that call. automatically. and if you are using margin in an account with other holdings. and say you buy 50k shares of msft on margin. there is no guarentee that the brokerage will liquidate the msft. they’re usually under no obligation to meet margin by closing the trade opened with it. they just want the cash. dont care where its from. call your broker to verify this.
  • 3- well the amount of cash you have stays constant. the margin fluctuates with the value of the portfolio
  • Level 1Comment deleted by user3 years ago (2 children) level 25 points · 3 years agoTo be fair I get calls from financial advisors all day long asking how to calculate the margin requirements on xyz option strategy/short/blah blah. Plenty of people can still trade well without knowing the entirety of reg t
  • Level 2Original Poster2 points · 3 years agoThis literally does nothing to answer the question. but thanks. Made 11k last month on my trading if that makes you feel any better or helps you with your concern for an internet strangers financial security haha. Cheers.
  • If an investor wants to buy a $10. 000 futures contract on margin. and the margin is 20%. he must pay $2. 000 in cash but can borrow the rest of the balance from the bank or broker. This is advantageous in cases where the investor anticipates earning a higher rate of return on the investment than he is paying in interest on the loan.
  • First you will need enough margin to even open a position which is the initial margin. a certain percentage of the total contract value you’re trading. if you’re trading a 100. 000$ futures contract this can be anywhere from 2000–5000$ initial margin and additional margin depending on the volatility and risk parameters of the underlying. you always gotta keep enough margin on the account to maintain a position. if you’re holding overnight the amount can double.
  • “Using margin to buy stocks is similar to using a mortgage to buy a house. In both instances. investors borrow money to purchase more equity in stocks or real estate. ” said Hashemian.
  • When traders are trading on margin. they’re charged interest on a margin interest loan. In the popular Robinhood app. users are required to have $2. 000 in their accounts before they can trade on margin.
  • In that case. $1. 000 is deducted from the $3. 000. The remaining $2. 000 has interest added on to that amount. Then. it’s $2. 000 x 5%/360= $0. 28 daily interest. While Robinhood charges 5% interest. each brokerage firm has its own interest and may be significantly higher. Investors should check margin interest rates with their firms.
  • Before an investors trades on margin. there are some rules a trader must follow. When an investor trades on margin. the Financial Industry Regulatory Authority (FINRA) that regulates trade has requirements. FINRA mandates that a trader must have either $2. 000 in their account or 100% of the stock purchase prices.
  • Once a trader has $2. 000 in their account. they can trade 50% of the securities they’re going to purchase. For example. if a trader has $2. 000 in a margin account. they can buy $4. 000 worth of stocks on margin.
  • After a trader buys an asset on margin. they have to maintain a certain balance in their accounts. A trader has to outright own 25% of assets in their accounts.
  • A brokerage firm may also ask for a trader’s net worth and income. In addition. a firm may conduct a credit check before an investor can trade on margin.
  • If traders need to trade on margin. there are some benefits. There is a potential to profit from trades. For example. a person buys shares of Apple stock for $100. 000 with a mix of $50. 000 cash and $50. 000 margin. If you sell the stock for $125. 000. the trader has a $25. 000 profit.
  • If a trader borrows on margin. they can have a brokerage firm give them extra leverage to make larger trades.
  • “One of the things I love about Robinhood is it’s … drawn millions of new people into the market. If we want people to become more savvy about personal finance and investing — and I think we generally say that we do — then I think they need to have the experience of being an investor. I don’t think those are things that you can necessarily learn just in a textbook. ” wrote Kaissar.

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