Quick question on margin interest.

L

l4t13

I have never traded on margin because of the extra risk and just not liking taking a loan. Now I'm thinking about taking small trades on margin. Say I take a small day trade on margin.

For this sake let's say a 100 share, 20$ trade.

So I take a 2,000$ trade on margin hold it to around close and sell it for a small profit.

How would my interest be compiled for that few hours. Scottrades rate would be 10.25.

Thanks.
 
Even if they charged you interest for that same-day round trip until the 3-business-day settlement date (which most brokers don't), $10.25 seems like a lot. Borrowing $2000 at 11% for a year costs $220 or $.60 per day. Assuming the 3 days includes an intervening weekend, 5 days' worth of interest is only $3. Maybe they have some minimum interest charge or something.
 
10.25 was the interest rate. Sorry I forgot to put the % sign in there.

So I would need to find the interest rate for a year then divide by 365 to find a day rate?

thanks.

good trading =)
 
Quote from l4t13:

10.25 was the interest rate. Sorry I forgot to put the % sign in there.

So I would need to find the interest rate for a year then divide by 365 to find a day rate?

thanks.

good trading =)
More...

What a scam...they "rape" you on margin interest, and then don't even pay you interest on short stock....I hate these retail brokerages.

In comparison, our people can use a $1million everyday for free with the same $25K PDT account (gotta take a Series 7 test, but that's not a big deal).

Don :mad:
 
Quote from l4t13:


So I take a 2,000$ trade on margin hold it to around close and sell it for a small profit.

How would my interest be compiled for that few hours. Scottrades rate would be 10.25.

Thanks.
More...


If you don't hold anything overnight using your margin, you shouldn't be charged any.

If they are charging you something for the intraday use, then change to another broker.
 
Quote from Don Bright:

What a scam...they "rape" you on margin interest, and then don't even pay you interest on short stock....I hate these retail brokerages.

In comparison, our people can use a $1million everyday for free with the same $25K PDT account (gotta take a Series 7 test, but that's not a big deal).

Don :mad:
More...

Thats Bull spit Don....Rape? Let me get this strait....someone wants to Borrow 100k intraday on sometimes volatile and risky stocks.....and asking them to pay 10% if they keep the crap is rape? thats too low if you ask me.

If you go home flat most firms don't charge...although they should...I challenge anyone to go to a bank and borrow a million dollars...see how long it takes to get that donw.
 
Quote from TM_Direct:

Thats Bull spit Don....Rape? Let me get this strait....someone wants to Borrow 100k intraday on sometimes volatile and risky stocks.....and asking them to pay 10% if they keep the crap is rape? thats too low if you ask me.

If you go home flat most firms don't charge...although they should...I challenge anyone to go to a bank and borrow a million dollars...see how long it takes to get that donw.
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And keeping all the short stock interest? Maybe some brokers will pay something if you have over $100k or something, but that limits it to 1% of "trading" accounts. We charge, maybe 6.75% and pay 5% on short stock interest...and nothing for intraday, that's the point I'm trying to make.

The "average" ROI is between 8%-12% per year for the normal "investor/trader" - so, to borrow money at 10% makes no sense (yes, there are always "exceptions" - but very few in this case).

No "bullspitting" on my end, LOL.....and not trying to argue, just stating facts and my opinion about those particular facts.

All the best,

Don
 
Quote from Don Bright:

And keeping all the short stock interest? Maybe some brokers will pay something if you have over $100k or something, but that limits it to 1% of "trading" accounts. We charge, maybe 6.75% and pay 5% on short stock interest...and nothing for intraday, that's the point I'm trying to make.

The "average" ROI is between 8%-12% per year for the normal "investor/trader" - so, to borrow money at 10% makes no sense (yes, there are always "exceptions" - but very few in this case).

No "bullspitting" on my end, LOL.....and not trying to argue, just stating facts and my opinion about those particular facts.

All the best,

Don
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well don, i know for a fact you get a nice spread from SLK from what you charge vs what they charge you...please don't play dumb with me:p ...as for shorts: the Clearing firm is at TOTAL risk for the short...sure, they make good interest,,,until of course, they have stocks like OSTK that cannot be bought in and the firms getting marked left and right......there is SO much risk to a firm holding a short and they should be entitled tomake as much as possible IMHO.
 
here is the reply i got:

Thank you for your e-mail. If stock is purchased in margin, it can
always be paid for in full by the 3 day settlement date, and no interest
will be charged. So in your scenario, you would not pay interest. With
a margin account, however, the investor has the choice of paying
anywhere between the minimum of 50%, to the maximum of 100% of the
transactions.

Margin interest for the amount of the debit balance will be charged
against the margin account, and it is accrued daily and compounded
monthly.
 
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