Portfolio margin

Quote from DayTrader101:

Dav,
I've tried the demo account of the PM, I entered 10 positions for different equities some long some short, there was increase in leverage but not much less than 5x

am I missing something here ?

and regarding the interest for overnight positions over the account balance do you confirm what Yip has mentioned that in PM account we don't pay interest ?!
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You will pay overnight interest if you have negative cash balance or you have short stocks. The latter to my best knowledge is only true at IB. Neither ToS nor OptionsXpress charge for the short positions.
 
http://individuals.interactivebroke...nterestMethods.php?ib_entity=llc#calculations

IB adjusts the cash balance by substracting short stock positions. So if your account cash balance was 0 ( or small enough ) before you sold the stocks short you are subject to the debit interest charges. Basically only cash ( not the securities ) is accepted for margining the short stocks. IB pays interest on the short sale proceeds only if over $100,000.

But you can always learn it the hard way.
:)
 
long stock has overnite margin value at 50 percent if the long stock is fully paid for you can short an equal dollar amount of stock without paying interest
 
lets assume that your long positions are fully paid for. the adjusted cash position =s the proceeds from your short sale - current value of the shorted stock.
if they are the same amount the adjusted cash balance =s zero and there is no interest to be paid.
 
Any way the other brokers as far as I know don't adjust down the cash balance by the short stock positions. So they never charge the interest no matter whether the stock is up or down from it's entry point.
 
if the short sale goes against you and you have a zero cash balance in your account a debit balance will be created as the stock rises in value and you will be charged interest at every broker.
 
The interest is charged only if the cash account balance is negative. Other brokers don't settle stocks every day as cash. Stocks are not marked to market.
The only value that changes every day is the total net liquidation value of all long and short positions.
If you sell stock short its proceeds are added to the cash balance and it stays unchanged whether stock moves up or down.

The broker does not have to charge the interest on short positions if he uses the total portfolio value as collateral. That's what the marginable securities are for.
 
Quote from yip1997:

you will get roughly 6x overnight leverage without interest cost.
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if you have $50k cash and you buy more than $50k worth of stocks, you will be charged interest. it doesn't matter if your account is pm or reg-t.

pm lets you borrow more but it is not interest-free!
 
Thank you guys for your input regarding the interest and the short positions.

Let's now get back to the main point which is how much leverage a PM account can give you, I know its not as simple as saying 6x or any fixed ratio but atleast I need to have a feeling of it for only stock positions no options no futures.
 
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