Newbie question on gained interest/ equity

Bugsy

Bugsy

Sorry still learning and really don't have people I know in r/l to ask these types of questions that are probably common knowledge for those here so thank you for any help in advance.

If you have a margin account and purchase stock and have all of your money tied up in said stock, and it gains interest/ equity (?), are you able to purchase more stock with this new equity from the cast the purchased stock has generated and double down with equity? Realizing this could be hazardous. Just asking more out of curiosity as I am unsure how the whole system works still. Thank you.
 
Bugsy said:
Sorry still learning and really don't have people I know in r/l to ask these types of questions that are probably common knowledge for those here so thank you for any help in advance.

If you have a margin account and purchase stock and have all of your money tied up in said stock, and it gains interest/ equity (?), are you able to purchase more stock with this new equity from the cast the purchased stock has generated and double down with equity? Realizing this could be hazardous. Just asking more out of curiosity as I am unsure how the whole system works still. Thank you.
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Yes ....... Your Buying Power will increase as your holdings increase in value.



:)
 
Of course u can. But not recommended! Any senior trader or reliable trade firm would suggest u not to use all of ur margin, that's too hazardous.
 
Leo Chu said:
Of course u can. But not recommended! Any senior trader or reliable trade firm would suggest u not to use all of ur margin, that's too hazardous.
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pick a number, any number. Let's say you are willing to risk (lose) 10k. It's the same 10k whether you are sitting on the position in a cash account or 100% margined. It's the same 10k loss. All margin does is speed up the process and make small moves meaningful. If you're not in a hurry and have plenty of time, you don't really need margin. Most traders are in a hurry and have very little time before their living expenses run out, so they go out, on margin.
 
loyek590 said:
pick a number, any number. Let's say you are willing to risk (lose) 10k. It's the same 10k whether you are sitting on the position in a cash account or 100% margined. It's the same 10k loss. All margin does is speed up the process and make small moves meaningful. If you're not in a hurry and have plenty of time, you don't really need margin. Most traders are in a hurry and have very little time before their living expenses run out, so they go out, on margin.
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Agree. Margin means leverage. High risk along with high profit, two sides.
 
Yes is the answer to your question. So you have two options and both options gives you purchasing power, except one that requires your patience. Using a leverage is the quickest way to buy more without waiting for you to increase your equity. What is does is increase your margin.
 
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