Buying on Margin Basics | by Wall Street Survivor

What is buying on margin? Opening a margin account allows you to trade on borrowed money. You have to open up a margin account when shorting stocks because you’re borrowing the stock rather than purchasing it. In order to maintain a margin account, you must have collateral to assure the broker that he’ll get his money back. Collateral is something (in this case money) that the borrower gives the lender as protection in case he fails to pay back what he owes. Initial margin: You must keep a minimum amount of your own money in the margin account when you sell the borrowed stock. The usual requirement is 150% of the value of the short sale. Maintenance margin: This is where the risk comes in. You must also maintain a minimum amount of money in the account depending on the current value of the stock you shorted As the price goes up, the maintenance margin requirement goes up, and you’ll need to add more and more money to your account. This is known as a margin call. Learn more about trading on margin with Wall Street Survivor's course Understanding Advanced Techniques: http://courses.wallstreetsurvivor.com/is/16-understanding-advanced-techniques/

Comments

1. what will be happen if the price of the share decrease..?
2. I am a student at a middle school in Cincinnati, Ohio. I would like to use your audio for a project I am working on for my class. The project will require me to download and possibly edit out portions of your audio. This project will be on a password restricted site so my work will only be published for my fellow classmates to see. Please respond to my reply to accept or deny my request.
3. what's in it for the broker if s/he makes $150 regardless of the price of the stock going up ?!
4. this videos are all fit to grade 11 student..and its me ..thank you
5. This helped me a lot to understand robin-hood gold.
6. Nick Leeson
7. But I don't wanna buy with margin :(
8. The pop tone is really annoying distracting
9. I just watched four videos trying to describe this. This is the only one that made sense to me
10. I am a student at a middle school in Cincinnati, Ohio. I would like to use your video for a project I am working on for my class. The project will require me to download and possibly edit out portions of your video. This project will be on a password restricted site so my work will only be published for my fellow classmates to see. Please respond to my reply to accept or deny my request.
11. Using this video to teach my 11th grade students about the causes of the great depression!
12. What do you call Frank in economic terms?
13. what stock goes up by a hundred dollars lol?
14. so the broker didn't make anything?
15. great video!
16. Typical interest rates on margin loans? Subject to FED interest rates? Credit score? LIBOR? etc.? What sets the loan interest rate?
17. Hope you passed :)
18. Please do!!
19. I am currently taking a finance class and I have a midterm coming up. These videos have simplified everything so well, I am no longer worried about the test. Thanks for the great videos!
20. tough calculations!!