Margin accounts

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gamblehappier
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gamblehappier

Margin accounts
« on: December 28, 2020, 12:52:38 AM »
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Hello guys,i hope you are well.For those who occupy with stocks market will know what margin(or leverage) is.

Some +ev positive investors will say that in order to succeed in stock market you should not use margin account.

Ok,for newbies maybe is not the best option, because without experience it is easy to lose a lot of cash, especially if you trade.

But margin is double capital which means if you win longterm you will win double.So for someone who have skills(and i do not mean crazy skills,just a 100 hour good research) and especially for those who want to park their money i think is a great choice.

Again is suitable for those people who win, safer for long term investors,who have experience(do not win by luck), have a diversity of stocks and of course the interest of margin is low(interactive brokers has low interest margin account,degiro has high interest-not the best option)

If i am wrong to something correct me,but i think my skepticism is correct.

Just a thought i want to share

« Last Edit: December 28, 2020, 12:56:00 AM by gamblehappier » Logged

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arbusers
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Re: Margin accounts
« Reply #1 on: December 28, 2020, 07:44:42 AM »
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I will again have to correct you.

and i do not mean crazy skills,just a 100 hour good research

Trust me. even 10000 hours of good research is not something you should trust for your financial freedom and safety.
Over the years, we have seen margin killing professional investors, previously considered a great caliber. It is always good to think with optimism, because optimism will bring profits, but at the same time you should be covering your back because covering allows survival. Margin will give you more profits maybe, but it could suck your capital much faster on a downswing.

What is the percentage of people who win in the long run really? And what is the ''long run''? Is it a market cycle, or is it something longer. Because a strategy that wins now is a failure guarantee in the next market cycle and vice versa. According to Buffet, no one wants to get rich slow. How about adopting a strategy of getting rich slow? Margin is like giving a Ferrari to a teenager. How about riding a bicycle first.
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CharlieSheen99
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Re: Margin accounts
« Reply #2 on: December 28, 2020, 09:13:21 AM »
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I look at margin like loans, because, when it says 1:100 margin, in my mind i allways think that i am betting 100 times the money that i am betting really

I never asked for a loan, because my grandparent told me that.

We have to be careful in this ultra-fast world. Of course sometimes we have to run, but just when we control everything, and we know perfectly where we want to go.
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gamblehappier
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Re: Margin accounts
« Reply #3 on: December 28, 2020, 02:18:44 PM »
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I think that you compilacated things.

First of all we should all agree that it is much better to invest your money at stocks/etfs/dividends than just saving or giving your money to your bank for 1/100 interest.I do not think that no one disagrees with this.

You should of course do research,pick at right time(downtrend),better famous stocks,diverisfy and just leave money to grow or at the worst scenario you will lose some.I mean do serious research and test things.

About Margin,i do not mean take a leverage of X5.I mean something like having 30k inital capital,get a loan of another 30k and start with final capital of 60k.Actually x2 leverage.

So you begin with 60.000 capital and start diversify to etfs,famous stocks,tech stocks,and in general stocks.If you have small interest i am sure that it is better that just leaving your 30k in your bank.Your inflation will destroy your money after 10 years at bank.

If someone believe that leaving 30k at your bank with small interest is a better option,i really do not know what to say.

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CharlieSheen99
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Re: Margin accounts
« Reply #4 on: December 28, 2020, 03:53:42 PM »
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At this time, i think that is a good idea to have liquidity. I have the feeling that big crash is close.

Anyway, a loan is not the same than margin, of course, i just say that i look at it with the same sceptic eyes.

I don't like loans because you ask for 1000 euros, and you have to pay 1100. So the other is doing business giving you money.

I don't like margins because you multiply your bets x5, x10, x100.... So dangerous if you are not an expert.

It's like start betting with thousands everyday.

For the momment what i am doing is just copy paste 3 guys that i have confidence in them because of past results. One of them is Arbusers.

And, for the momment all of them are in positive. Cross fingers,🤞🤞
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gamblehappier
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gamblehappier

Re: Margin accounts
« Reply #5 on: December 28, 2020, 07:58:20 PM »
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It is nice to keep conversations like these.Yes i take comments positive,do not worry about it.

You are right about liquidity,maybe a crash market is near.And in general is good to have cash all the time.Imagine if someone had enough cash when the pandemic started.

And i am sure that there are people who invest tones of money when covid begun

When you see stocks of apple,amazon.google with so big market cap go dip,it is wise to invest.

Personally i do not like loans,but this is investement.I think that you get my point,i speak for low leverage(x2),just to double your capital.Also you can also have stop losses in order to prevent capital.Again if you have skills,diversify etc..

In your example the interest is huge(10/100).Of course i do not speak for so big interest,because you lose enough money.

Interactive brokers interest is 1.6/100 which is too low for a margin account(they charge for others things,but margin account interest is extremely low).So why not?

Again as you said everyone should stay away from x5,10 leverage..

Good news that all of your copiers are positive! ;) Me personally, i do not follow specific people,i just do my research to different sites(also here) and diversify my stocks. ;)

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ilovethisforum
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Re: Margin accounts
« Reply #6 on: January 01, 2021, 04:43:22 PM »
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The biggest problem with leverage is that most traders do not use leverage prudent. They use it for extreme gains/loses. This have an impact in your margin position too, because if you will go in a trade with prudent leverage but most of the traders in this trade use aggressive leverage, there is very high probability that in the long run something bad will happen and the margin calls of the other traders will impact/hit your margin requirements and probably your liquidation, as their stop losses/liquidations will start a snowball effect, affecting your positions too. In my opinion leverage is good for boosting your capital 10-20% most. For example, if you deposit $1000 you can "safely" have buying power of $1100-$1200 for your trades. So, let's say that you want to buy AAPL using your $1000. If the platform offers you maximum 3X leverage, you can assume that just borrowing 0.1X from that 3X leverage, you can be very safe in an event of crash/collapse/whatever happens. So, you have basically bet for $1100 on AAPL to go up with just $1000 of capital. In my opinion, you are very safe with that amount of leverage. It is like a small boost on your returns that will compound in the long run.
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