Do you use cash or margin when trading?

Discussion in 'Trading' started by Comptalk, Oct 12, 2007.

Which do you use when trading stocks and ETFs?

  1. Cash

    5 vote(s)
  2. Margin

    8 vote(s)
  3. Little of both

    12 vote(s)
  1. Do you use cash or margin when trading stocks?
  2. Cash, don't mess with margin. I would only borrow on margin if I got tipped off on a huge deal.
  3. I don't do individual stocks...

    In a cash account and after a sale don't you have to wait until settlement to use the cash to buy a different security?

    In a margin account you can use the margin to buy before settlement on a sale?

    If this is correct, wouldn't it make sense to have a margin account even if you don't use the leverage much or at all?
  4. cstfx


    Theoretically you can buy stocks with little or no money in your account as long as you have cleared funds in the account by settlement clearing. It was much easier to buy w/o money when there was 5 day settlement (from my stockbroker days).
  5. rwk


    U.S tax code prohibits using "debt leverage" to buy investments for a tax-advantaged entity such as an IRA. Some brokers are now allowing IRAs to have restricted margin accounts that give them immediate access to funds during the settlement period. This is something fairly new. I have an IRA with IB that allows me to daytrade stocks and use the entire equity. Previously I had a corporate pension account that was subject to T+3 settlement and that sucked.

    BTW, "margin" for futures and options is a misnomer. It is really a performance bond, not a form of debt. I see no reason why traders should not trade futures and options in a tax-advantaged account, but most brokers disallow it.