Why Not Use Margin?

"I always hear don't trade with money that's not yours etc."

I disagree with this wholeheartedly. I ask you, why trade with your money at all??? Why would you want to risk your own capitol if you dont have to? Why not go find a prop firm that will take you on, learn how to trade sucessfully...then use those profits to leave and trade on your own.
 
Quote from Corso482:

I got to thinking that using margin is essentially the same thing, only I would have to pay interest instead of splitting the profits.
If possible I'd rather use margin than my mother's money.
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Guess what. Single Stock Futures give you 5:1 margin, and there's no margin interest on it! Links are in my signature.

With 5:1 margin, you can comfortably trade 2:1 your account size, with no margin call problem. Even 3:1 will be ok just about all the time if you're doing ok trading.
 
Good points. I would add the actual cost of margin interest can mount up over time. I think most investors are well advised to use margin only during strong bull markets and then use it sparingly.
 
Quote from a_ooiioo_a hii:

Guess what. Single Stock Futures give you 5:1 margin, and there's no margin interest on it! Links are in my signature.

With 5:1 margin, you can comfortably trade 2:1 your account size, with no margin call problem. Even 3:1 will be ok just about all the time if you're doing ok trading.
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Aren't single stock futures illiquid? Don't they only exist for a few stocks? Sorry, I'll check the link.
 
Margin rocks and is the basis of futures trading... when flipping 20 ES, why should I be fully-funded to the value of the underlying, when that money could be more productively used in passive income-generating assets such as real estate or a high interest account?...

The existence of margin doesn't mean you gotta operate outside your risk parameters, but what margin does do is free up the necessity to have capital sitting non-productively in your trading accounts...
 
There's about 100 stocks that have stock futures. It's a very good basic list, including most of the Dow Jones Index.

For instance, QLGC, you could have done quite nicely with that one today (knowing that it was earnings reporting for them).

Illiquid is somewhat of a myth. Especially if you're starting off small enough that you're considering borrowing form your mother. I've never had a problem getting an immediate fill on them.
 
I doubt by probability law that all of a sudden one day you can't wake up to find your entire acct. down more than 50% :).

Quote from Corso482:

Let's say you are swing trading, putting 1/10 of your capital into each position, using 5% stop loses...I doubt all of a sudden one day you'll wake up to find your entire acct. down more than 50%. And if you really want to be safe, stop trading if your losses reach 40%, worst case scenario.
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