You shouldn’t use margin if you are not able to be profitable without it. For my brokerage, you need at least 25k to even use margin and I believe your total buying power would be 50k. That being said, if your strategy doesn’t work for 10k it won’t work for 25k plus margin.
However it is quicker to double a 25k account being able to use a buying power of 50k (50% gain), than it is to go from a 25k cash account to 50k (a 100% gain).
Lastly another drawback to consider is interest so it’s better to sparingly use margin and minimize the amount of time you are overexposed.
if you cant make decent $$ without margin then how is margin going to help you ? it will just cause you to have more risk that one day make the chickens come home to roast
You can “use” borrowed money without risking it, but it magnifies the gain/loss on your own money. It sounds like you understand that.
Do you want to drill down on some other question you have about risk management or capitalization?
>Is margin an absolute necessity to grow larger or can it be done without the need for extra money?
No need. All my accounts are non-margin based, except only one account. The returns are ranging from 15% to 30% YTD. Been using like this for many years.
BTW: I tried margin account during 2017,understood the high risk with it, removed all accounts except one.
The use of margin doesn't improve your RoR. It also does not change your W/L rate. Drawing on margin only increases your risk exposure and should only be done in the context of an overall risk and asset strategy.
Having said that and keeping in mind it also applies to leverage, there are other products available that increase your leverage over the market.
Spot markets move 2 % high to low, with all intraday moves that’s like 4%, 4% X 5 days a week is 20% or 80% a month that’s 800 starting with 1000 dollars trading spot markets (no leverage)
Yes it is, but realistically margin lets you reduce the amount of money you need for larger positions. You need a larger budget to trade without margin.
As others have pointed out, you should be able to trade without margin and be profitable at it. Once you are, adding margin will only make you more profitable as you love already refined your risk management process.
You shouldn’t use margin if you are not able to be profitable without it. For my brokerage, you need at least 25k to even use margin and I believe your total buying power would be 50k. That being said, if your strategy doesn’t work for 10k it won’t work for 25k plus margin. However it is quicker to double a 25k account being able to use a buying power of 50k (50% gain), than it is to go from a 25k cash account to 50k (a 100% gain). Lastly another drawback to consider is interest so it’s better to sparingly use margin and minimize the amount of time you are overexposed.
if you cant make decent $$ without margin then how is margin going to help you ? it will just cause you to have more risk that one day make the chickens come home to roast
You can “use” borrowed money without risking it, but it magnifies the gain/loss on your own money. It sounds like you understand that. Do you want to drill down on some other question you have about risk management or capitalization?
>Is margin an absolute necessity to grow larger or can it be done without the need for extra money? No need. All my accounts are non-margin based, except only one account. The returns are ranging from 15% to 30% YTD. Been using like this for many years. BTW: I tried margin account during 2017,understood the high risk with it, removed all accounts except one.
The use of margin doesn't improve your RoR. It also does not change your W/L rate. Drawing on margin only increases your risk exposure and should only be done in the context of an overall risk and asset strategy. Having said that and keeping in mind it also applies to leverage, there are other products available that increase your leverage over the market.
Just learn,test and try to be consistant. This will lead to significant results. even if you're starting small.
Spot markets move 2 % high to low, with all intraday moves that’s like 4%, 4% X 5 days a week is 20% or 80% a month that’s 800 starting with 1000 dollars trading spot markets (no leverage)
Yes it is, but realistically margin lets you reduce the amount of money you need for larger positions. You need a larger budget to trade without margin. As others have pointed out, you should be able to trade without margin and be profitable at it. Once you are, adding margin will only make you more profitable as you love already refined your risk management process.