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Fellowship of the Shares
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j3r0m3
Veteran |
14-May-2007 17:33
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i think this scenario that you mentioned has happened to the average Joe on a daily basis. Personally, i can relate to it. However, when it starts to breakout of consolidation, wouldn't it be too late? |
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Livermore
Master |
14-May-2007 17:13
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Hi j3r0m3, A friend asked me just a few days ago as he was not sure whether to buy A or B share. Unfortunately he chose the wrong one. He chose A but B went up 5c today. If he had a margin account, what I would tell him to do is put in 10 lots in A and B as he wanted to buy 10 lots in one of the 2. Have you ever been in a situation when you cannot decide which share to buy? As I explained in my previous posts, I do not borrow money yet during the accumulation phase. But even in slightly borrowing amount it is ok. I only really start to borrow when my share breaks out of consolidation phase. How much you wish to leverage up once the stock breaks out is entirely up to individual. Maybe for a beginner, try just a bit only. |
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j3r0m3
Veteran |
14-May-2007 14:03
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Hey Elf & iPunter, thanks for taking time to explain to me. I guess its really a case of knowing the limits and really exercising discipline. The market does look good today though. As for the email addy, i can only hope that the folks at Google do a good job of filtering spam. =/ Do email me though... hahah... |
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elfinchilde
Elite |
14-May-2007 13:04
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hey jerome, concur with ipunter. be very, very careful with margin. you need to know how much you're putting up, and how much the costs and leverage are, what price your margin call lies, and if you have sufficient reserve funds in event of a margin call. this is a bull market; so practically every counter you buy will be green; but in leaner times, it will perhaps not be as easy. and hahahah! yes, i can hear your sigh with regards to the email addy too. :P |
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iPunter
Supreme |
14-May-2007 12:59
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PS> Of course, if you can afford it, you can play an appropriately larger amount... |
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iPunter
Supreme |
14-May-2007 12:58
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Hi j3r0m3... |
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j3r0m3
Veteran |
14-May-2007 12:02
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oic. i get the gist of it. however, you say that the margin loan is 5 times the cost of 1 lot, so meaning the loan amount for different counters is different, right? so what would the interest be? (i'm assuming there is bound to be interest, cos there's no free lunch) |
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iPunter
Supreme |
14-May-2007 09:11
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Hi j3r0m3... Margin trading goes something like this... Let's assume hypothetically that SIA is trading at $20.00. So one lot will cost you $20,000. But let's say you are the impatient type and want to make money faster. So you intend to buy 5 lots of SIA, which will cost $100,000, but you do not have so much cash at hand. For the case of CFD, the broker will be able to grant you a margin loan of up to 5 times the cost of 1 lot, ie. $100,000 and you need only cough out $20,000 in cash to play $100,000 (5 lots) worth of SIA shares. So you see, you are not investing in just one lot although you paid only for one lot. You are actually playing five lots,. And this is where the danger lies... Any fall in the price by a certain amount will be magnified 5 times (5 lots). And when the amount you have paid up is insufficient to cover the minimum maintenance margin set by your broker, you will need to top up the initial cash outlay. This is known as a margin call. |
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Livermore
Master |
14-May-2007 07:14
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I am really confident you can make big profits just using a simple strategy with margin loan |
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j3r0m3
Veteran |
13-May-2007 23:00
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Haha, Asterisk. You take the words right from my mouth. *puts hand in the air* |
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geojam
Member |
13-May-2007 22:46
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Sporegal I qualify to be ur uncle rite?Yes ,i am in my early fifties.Technically,i have not reached retirement age. But i am working from home---doing share trading/investment. Are u interested in margin loan as well? |
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j3r0m3
Veteran |
13-May-2007 22:31
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Yes, it is. |
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Livermore
Master |
13-May-2007 22:16
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Hi j3r0m3, I use margin trading more for long term investment. I hardly trade |
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Livermore
Master |
13-May-2007 22:14
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Is that Jerome.png@gmail.com? |
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singaporegal
Supreme |
13-May-2007 21:51
Yells: "Female TA nut" |
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Hi geojam, Wow! Your mom is 82.... hmmm... lemme guess, you're in your late 50s! Am I right? |
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j3r0m3
Veteran |
13-May-2007 21:16
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hi Livermore, my email is jerome.png dot gmail.com (paiseh, the spam bots are quite prevalent nowadays) |
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j3r0m3
Veteran |
13-May-2007 21:13
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hi iPunter, thanks for the word of caution. I have an idea about margin trading and the trading on borrowed money part. What i don't know though is how and the workings behind it. |
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iPunter
Supreme |
13-May-2007 20:57
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Hi j3r0m3... Assuming you are new to the world of the stock market... It is useful to remember that margin trading is actually... Using borrowed money to play a bigger amount of shares than you would not otherwise be able to afford. eg. CFD is a form of margin lending scheme... in which you are given say up to 5 times the cash to play by paying only one-fifth of the amount up front. Due to the leverage involved, it is not advisable for beginners to do margin trading... until one is well-experienced, since losses can be magnified too. Just a caution... :) |
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Livermore
Master |
13-May-2007 20:33
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Hi j3r0m3, For details on margin trading like when you get margin call and the percentage financing for different types of shares, you can ask Geojam. To tell you the truth, I forgot or don't really pay much attention to what my broker tell me. However I can share with you how I do it. It is similar to how Geojam does it.We average up. The interest is not much compared to your gains. If done the right way, your first, second and third year interest are all paid off before you reach half year. What is your e-mail? Of course it can be a double edge sword if you use it wrongly. But this is one way where your profits can be really BIG |
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j3r0m3
Veteran |
13-May-2007 19:47
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Hi Geojam/ Livermore, i'm keen on knowing more about margin trading. Could you explain on the process or point me in the right direction? Can i email you guys? |
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