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| What does it mean when I purchase securities on margin?
When you borrow on margin, you use the marketable securities in your account as collateral for a loan from your broker. The money borrowed is used to purchase more securities. So at 50% margin, you can have $2,000 in securities when you only had $1,000 in cash. You have a loan for $1,000 and must pay interest in that loan.
If the value of the securities falls below a certain percentage of your margin loan, you will be required to either sell some of the securities, or put more cash into the account. This is called a “margin call”. In most cases the broker will call and allow you some amount of time to deposit the additional funds into the account (or sell some securities). But in very volatile times, your brokerage agreement probably allows for your broker to sell your securities without contacting you to satisfy the margin requirements.
This is a risky investment and requires a good knowledge of investing. The fact that you are reading this probably suggests that you ought to seriously consider trading in a cash only account. | |
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This is a risky investment and requires a good knowledge of investing. The fact that you are reading this probably suggests that you ought to seriously consider trading in a cash only account. |
about that financial discussion we were going to have.... I think I
need you Ron.
Shellie |  Say what?  |
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