It can be a little scary
It can be a little scary deciding which account to choose when you are just getting started? Should you use a cash or margin account and which is best for you! Just a reminder that you can always switch between both account types so do not get scared, you have nothing but time to decide which is the most suitable for you! Enjoy!
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I feel more comfortable earning the right to trade through simulators for as long as it takes. Simultaneously I will be building my account to 25k. However, I would like to investigate other means of trading that does not violate the Pdt rule such as overnight and futures.
Margin trading is great for day trades and swing trades if you are an experienced investor. Definitely have a stop-loss order set up and a limit order (know your exit point).
Doesn't work well for long term investing because of interest rates. However, if you have done your research and expect a stock will say go up 4% short term, using 50k margin leverage to buy that stock would give you a $2,000 return. Again, you need to do your research on the company, know market trends at the moment, have a stop-loss order in place and be willing to lose a little money. Never use more than 25% margin of your account's total value, in case of margin call, but again if you are smart and have a stop-loss order in place you won't have a margin call because you will keep your account's maintenance balance.
Margin interest rates are listed as annual figures that are internally added up daily and then charged to the account monthly. For $20,000 margin a rate of 8.70% annual interest will be assessed and calculated as (0.087 x 20,000) / 360 = $4.83 daily.
Great great great video Ricky! This is so absolutely amazing!! I am still deciding which account to choose for Robinhood, but this really helped me differentiate the accounts! Thanks Ricky! ??
How does Robinhood get their money back? I used 997 of the 1000 margin I allow myself. How do I pay them back? Will they ever take the 997 back?
One trading jargon that
One trading jargon that you’ll hear very often is margin. It’s usually in terms like margin account, margin trading and even margin call. It seems a bit complex at first but after this video with trading expert David Jones it should be something quite easy to grasp.
David breaks it down to the basics once again and explains the meaning of the word as well as the scenarios in which it’s used. He makes several trades on the Trading 212 platform - one in Forex and one for a stock CFD - and points to the exact value of the margin as it changes once the trade has been opened.
He also shows traders something that they might overlook - the cost of holding a position over night if you are trading on margin, i.e. with money borrowed from the broker.
For those of you that like to have something written down, here’s the definition of margin trading - it means that an investor pays only a percentage of the value of the asset and borrows the rest from the broker. The latter acts as a lender and uses the deposit as a collateral on the loan. The margin itself is the amount in the account that the investor has put down and is usually displayed as a percentage.
Still got some questions about margin trading? Let us know in the comments below.
At Trading 212 we provide an execution only service. This video should not be construed as investment advice. Investments can fall and rise. Capital at risk. CFDs are higher risk because of leverage.
It’s taken ages to get into the green on my account what’s the problem .
So margin and leverage are the same?
hello david you videos are great can you please make a video on paying taxes and how it works ?thanks
OK I have invested if CFDs on trading 121 and seems to be doing well but how can I take my money out?
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