What is trading with margins?
Margin Trading borrows funds from a brokerage house to buy shares on an open stock exchange. Trading with margin allows the investor to avoid using his own funds - which can have strict limits if the investor has low capital - in trading in the stock market. Not all investors qualify for margin trading. Brokers usually have strict requirements to ensure that they do not extend capital to individuals who are unable to generate revenues that pay borrowed funds. Investors short shares by selling shares that do not own. This is common when the investor believes that shares are falling in the price. As the stock price decreases, investors sell short money shares. To make it right, investors often need a margin to "sell" shares on their business account. The brokerage house lends investors money to sell shares and expects to recover funds after the investors "buy" shares for profit to cover their position. Margling trading is extremely risky becauseE Short -circulated position can be quickly erased if the shares experience huge profits in one day.
In account margins, brokers may require investors to deposit certain amounts of funds on their accounts as a security deposit. This ensures that investors remain financially entrusted to the business process. For example, trade margin accounts may require an investor to deposit USD in USD (USD). When purchasing shares or their short sales, the investor can borrow a certain percentage, such as 50 percent, out of the total purchase of shares that is financed through the broker funds. For example, the total purchase price for a group of shares may be $ 2,500; The investor puts $ 1,250 in an investment from a total of $ 5,000 and lends the remaining funds from the broker.
Business action of the edge is not free. Most intermediary companies charge fees or interest on borrowed funds. Creating large municipalitiesThe feasts using accounts on the edge will result in lower revenues, because intermediary companies deduct fees and interest on money raised by investors. These funds will either reduce future investment profits or increase losses from the stock trade. Trading margins can also have specific limits set by the government, resulting in other limits stored by brokerage houses. For example, Penny shares or initial public offers are usually not supplies that the investor can sell short for government regulations.