Margin question

Discussion in 'Professional Trading' started by jugiproject, Jul 21, 2006.

  1. Lets say i deposit 10k and get 4:1 margin.. so have total 40k buying power. If i decide to buy 20k worth of stock ABC will i be charged interest for using thier 10k? and how do these interest rates work? daily charged?

    Another question

    can i not use the margin they provide and strictly trade using my own account? its perfectly fine to do that ? this way i can aviod margin calls, correct?

  2. fletch2


    Of course.

    You will have to look at the policies of your lender, but it is just a loan, much like any other.

    Of course.

    You cannot get a margin call if you have no holdings on margin.

  3. Thanks fletch, i apprecaite you taking the time to respond.
  4. You could open a cash account, which you do not allow to loan (margin) all the time.

    However I suggest you opening a marign account since you can borrow money (get margin) should you wish to.
    You can restrict yourself to use just the cash even in a margin accout. Unless you are careless and often tempt to be outbudgeted, you should be fine.
  5. You cannot short in a cash account if you trade equities.
  6. The account is margin and cash, i can short equities with only my cash if i wanted right? b/c its a margin account.

    Thanks to all those who responded.
  7. Actually, you may have gotten some bad info here:

    1) if you put in 10k you can only get 20k in buying power...Day Trd. BP is 4:1 IF YOU HAVE 25K IN EQUITY.

    the interest rates are charged by the clearing firm and vary month to month depending on the fed, cash on hand and other factors.

    Also, you CAN get a margin call even though your flat...if you exceed you stated BP due to open positions, the Clearing firm must issue you a call for the hi point of tha day and even though you are flat, yo must come in with the cash within five days and leave the extra cash in the account 2 business days.....bizarre rule, no dont, but if you don't come in with it , some firms will close your acct. or put you on a CBO
  8. broker loan/call rate i believe ~8%

  9. That is the industry standard...some charge more...some charge less depending on the balance....usually for smal customer accounts its broker call +2%