What questions should you ask yourself before you start margin trading?
Category:
Business & Finance > Renting & Real Estate
Keywords:
question, ask, account, margin, stock, trading
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what
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Answer:
Ask Yourself These Key Questions:
Do you know that margin accounts involve a great deal more risk than cash accounts where you fully pay for the securities you purchase? Are you aware you may lose more than the amount of money you initially invested when buying on margin? Can you afford to lose more money than the amount you have invested?
Did you take the time to read the margin agreement? Did you ask your broker questions about how a margin account works and whether it's appropriate for you to trade on margin? Did your broker explain the terms and conditions of the margin agreement?
Are you aware of the costs you will be charged on money you borrow from your firm and how these costs affect your overall return?
Are you aware that your brokerage firm can sell your securities without notice to you when you don't have sufficient equity in your margin account?