Should I Trade on Margin Account? What is Margin Trading?

🔽Time stamps:
1:10 What is margin trading?
3:17 Pros of using margin account to day trade
7:30 What is margin maintenance in trading?
12:39 Trading tips for trading on margin

Is margin trading risky? Should beginner day traders trade on margin accounts?
Margin has a bad rep online, people call it gambling and the reason why new traders fail at day trading. But the reality is that MARGIN is merely a tool for day traders to use. It's RISK MANAGEMENT that'll determine whether a trader become profitable or not.

If a trader disregard risk management, he or she can blow up both margin and cash trading accounts! Almost all full time day traders I know use margin trading. All of my day trading broker accounts are margin accounts.

PROS of Using a Margin Account:
1. Leveraged buying power
Trading brokers will give you 3 to 1 or 4 to 1 buying power. Some brokers will even give you 6 to one leveraged buying power. HOWEVER, just because you have the buying power to day trade, does NOT mean you should use all, or even all of capital to day trade!
2. No trade settlement period
3. Margin account gives traders ability to short sell stocks.
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DISCLAIMER: I am not a financial adviser nor a CPA. These videos are for educational and entertainment purposes only. Investing of any kind involves risk. While it is possible to minimize risk, your investments are solely your responsibility. You must conduct your own research. I am sharing my opinion with no guarantee of investment gains or losses.

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Humbled Trader FAM count: 462,000

[mann]

With the margin account, the trader has to sleep with one eye open - lol

[braveharttrader]

Honestly I have listened to many tutorials on Margin Trading on YouTube by others and yours was the best Humble Trader. Your strong point is you keep it to the point, you choose a clear simple perfect example for explanation and of course the best part - your bad jokes :) I really like your tutorials. Thank you.

[davrms]

finally somebody explained so clearly!!! understand perfectly, thank you very much

[zfrbtiv]

are you not afraid to use promising but young services like WOWswap? is marginal trading on dexs becoming even more risky?

[miles]

Margin sounds nice, I just don’t trust myself with that kinda power....

[agentsmith]

I have been trading for 30 years, of course my margin purchasing power is in the millions. Most of the trading I do requires you to have margin purchasing power. Never used more than 50% of my margin . If you cannot write a check for your margin balance when it's called I would not recommend it especially for beginners.

[eugenefox]

If someone's country has blocked CEXs, you can trade with leverage on WOWswap for example. Or on any other exchange.

[BreakorBailTrading]

I’d start with cash account if you’re well below 25k and prove yourself you can build up to that. Otherwise, you probably have no business using margin if you’re day trading.

[georgemcduffey]

I've started with a small cash account. Each time I profit $50 I add $50 from my bank account. The slow-going-goal (theoretically) gives me time to become a consistently profitable trader before I switch to a margin account (although, somedays it's very tempting to go ahead and step up; in my paper account I make more short-selling than I do going long). You mentioned one of the cons of a cash account is waiting for the settlements, but I see it as a plus. If I use all of my available funds today then tomorrow I'll trade virtual paper to keep up my training in real time.

[slvrserfr]

I upgraded to margin only because I got tired of the restrictions in selling and buying. Couldn't care much for the leveraged borrowing aspect though.

[nevermind-heni]

I use margin as a backup only for emergencies. Like a credit card.

[Siegeclan]

I trade using margin sometimes, but I try to keep my exposure to it less than 10% of my portfolio's value.

[arthurkorff]

"Rainbow, sunshine and lambos" love it!

[daveclark]

I trade with a margin account. I am a beginner trader and I have never used margin for my trades. For now I know it is best for me to only make trades with my own funds since I am more susceptible to make mistakes as a beginner. One day when I am a baller trader like HT I will be in Margin City! 😉 Thanks for the great informational video! 👍

[jhernandez]

I’m also new to trading/investing and have been doing it on a margin account without knowing exactly what it is, luckily for me I made 3k since opening account on sept 1st with my 20k initial deposit +10k that I borrow from TD. Now I know what I need to do to stay out of trouble. Thank you I enjoy your videos, I’ve learned a lot and you have given me the confidence to open the brokerage account and take calculated risks.

[VSLK]

I just love listening to her talking about stock, great materials. Thank you

[fxmpyzh]

do you think a leveraged trading strategy on dexs such as WOWswap would be different from the one you describe here?

[Darrin]

Think I've learned more from you than when I studied for and passed my Series 7, 66 and 24 licenses.

[KingArtexerxes]

I’be had a margin account in the past, but never used the extra funds available, didn’t know I could at that time. For past several years I’ve been trading from a cash account. I used to be able to trade in TDA with whatever money was available in “Cash available for stocks” but now if I do that, I get hit with a violation when I sell with money that hasn’t cleared yet. That’s odd. I hated margin account because of the PDT rule. Always waiting. So, after watching this video, I will switch to a margin account soon, and begin shorting stocks. I’ve never done that before, but seems fairly safe if I start out by using no more than 10% of total funds per short. Seems if I were to hit the sell button where I normally hit the buy button, I’d be much better off.

[learningtocrash]

I just started the process to switch to a margin account and will put in enough to avoid the pdt rule. Ive been trading for 3 months and had some great learning experiences in April then had a profitable May (33 winners and 4 losers with 11 winners bigger than the biggest loser). I plan to continue day trading with the faster settlement time and maybe use margin once I've proven to myself that i can truely do it.

With my cash account I'm compelled to keep temporary losers longer (while stressing about it) rather than cutting them loose once they fall too much or keeping ones that dont take off as fast as i had anticipated, because the money is tied up for 2 days anyway so i might as well try to maximize every trade. With margin i will be able to cut losers or slow movers and move on.

I got used to cutting losers in April, but getting the money back that day makes it so much easier.