Trading US stocks with leverage

K

KMK.AM

Hi Guys,

This is my first post and hopefully I´m in the right section.
I´m currently trading CFDs on US stocks, now I would like to trade with higher amounts but I don´t trust the market makers for CFD.

Now the questions are as follows:

- Which instrument (e.g. options) for US stocks would you recommend?
- Which broker would/do you use?
- Any hints for additional software?

Each quarter I screen every sector like utilities, finance, consumer staples/discretionary and so on.
The broker should have as much stocks as possible which are over 1 billion market cap.

To be honest, besides CFD- and the normal stocks trading without leverage I have no idea about other instruments.
 
You could trade stocks with leverage (2:1 overnight or 4:1 during the day or even higher if you have portfolio margin account). There's also SSF (Single Stock Futures).

While options have some similarities to a leveraged trade, they are more complex than simply a leverage tool. Their values decay over time (because they expire), while implied volatility, upcoming earnings reports, or other events that will imply a jump in the underlying price will tend to drive options prices up.

The point is that options can get you a similar effect as leverage, but they are not that simple. How much leverage are you looking for? If 4:1 during the day and 2:1 overnight is sufficient, then consider simply trading stocks on margin. If you need more and have enough capital for a portfolio margin account, then go that route. Much simpler than dealing with options and better liquidity than SSF.
 
I think that you need to define for yourself what level of financial risk you would feel comfortable with. What kind of volatility would scare you? Only then can you better define whether you would want ETFs, single stock, stock options, futures, etc.
 
Get a portfolio margin account at www.interactivebrokers.com if you have $100,000. This will give you buying power in excess of $600,000 to buy stocks. Thomas Peterffy did disclose on a recent IB conference call that most of the $20b in margin loans at IB are involved in merger arbitrage.
 
Thanks everyone, that helps a lot.
@Lee: Currently I'm trading with a leverage of 1:10 or even 1:20.

@Hobby: I already decided to trade with US stocks, my headging strategy seems to be very good. I'm only placing 8 Trades per quarter.

@Just: Will check IB out, thanks!
 
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You aren't going to get better margin leverage on US stocks than you do already for CFDs. IB might be a cheap place to trade them, so they could be worth checking out.
 
If I have 5k to trade with and want the most leverage possible without using cfds what are some good options? For IB I need 25k for a day trading account otherwise I think I get 2:1?
 
I use only technical analysis and i'm on VantageFX. What strategy do you use ?
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