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Zecco.com » General Investing » Margin Trading » Margin account question
Last post 09-05-2008, 5:53 PM by -Norm-. 2 replies.
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  •  09-02-2008, 9:41 PM 37203

    Margin account question

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    when i have $3000 cash in my account, it showes my buying power is $6000,
    after I bought $3000 stock, my balance shows:
    cash                            1500
    market value               3000
    total equity                  4500
    maint. excess               1500
    buying power               3000

    does that mean i actually used $1500 cash + $1500 margin?
    what if i don't want to use margin right now since i have enough cash there?
    can i set up a priority--i mean, always use cash first
    as long as there is enough cash?

    thanks!















  •  09-02-2008, 11:59 PM 37208 in reply to 37203

    Re: Margin account question

    Reply Quote
    By definition, buying power means the power that you have if you decide to use it.   Think of it as the projection of the amount that you are capable of buying or the limit of your power if you decide to exercise it.

    To answer to your question:  no!  You are not using any margin.    Btw, if you have $3000 and no free trade left, by buying $3000 of stocks, your total costs would be $3000 + $4.5 which mean you use $4.5 margin.
  •  09-05-2008, 5:53 PM 37493 in reply to 37208

    Re: Margin account question

    Reply Quote
    Lessons Learned- It is difficult to learn lessons when they come with an expensive price tag.  Yet, I am still learning.  I guess this is a good thing, that we should continue to learn as we get older.  My most recent lesson learned is that of the dangers which come with using margin to trade.  Plain and simple, I have failed with margin.  Thinking that I could buy large amounts of stock, with borrowed money, and watch as I hope to see the stocks go high, has not work out for me.  In fact, I have lost more money because of it, and I am now below the original amount of money that I began investing with.  The killer is the margin calls.  I have had to sell stock at much lower costs than when I purchased them, just to meet the margin calls.  Please be aware of the dangers that come with margin money.  So, I will work to cover my several thousand dollar margin debt, and try hard to stay away from it, and get back to the basics.  Good luck out there folks. Now, if I can just re-learn the lesson of being diversified in my portfolio, I just might get back on track.
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