Long/Short margin

Discussion in 'Trading' started by urrterrible, Jan 21, 2012.

  1. I would like to make my own long short fund instead of sitting in cash.

    If I open a 100k account and short 50k worth ove stock and buy 50k worth will you be paying interest on the shorts? Or do you pay margin interest only when those shorts move against you?

    I believe any dividends on my shorts get taken out of my account.
     
  2. rmorse

    rmorse ET Sponsor

    It depends upon what broker you go to as to how you're charge for shorts, but it has nothing to do with profits and losses. Some retail firms, charge to short stock on all short securities. Some only charge for the hard to borrows. You're charged based on the credit balance for the right to borrow that securities so your brokerage firm can make delivery to the person that bought the security from you.

    Also, if you leveraged on the buy side, you might pay interest on the long side. When you calculate your cost, you should assume your paying on both sides. Call your current broker to get details.