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Margin Buying Basics | by Wall Street Survivor

664 ratings | 121822 views
What is buying on margin? Learn more at: https://www.wallstreetsurvivor.com Opening a margin account allows you to trade on borrowed money. You have to open up a margin account when shorting stocks because you’re borrowing the stock rather than purchasing it. In order to maintain a margin account, you must have collateral to assure the broker that he’ll get his money back. Collateral is something (in this case money) that the borrower gives the lender as protection in case he fails to pay back what he owes. Initial margin: You must keep a minimum amount of your own money in the margin account when you sell the borrowed stock. The usual requirement is 150% of the value of the short sale. Maintenance margin: This is where the risk comes in. You must also maintain a minimum amount of money in the account depending on the current value of the stock you shorted As the price goes up, the maintenance margin requirement goes up, and you’ll need to add more and more money to your account. This is known as a margin call. Learn more about trading on margin with Wall Street Survivor's course Understanding Advanced Techniques: http://courses.wallstreetsurvivor.com/is/16-understanding-advanced-techniques/
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Text Comments (46)
Igor Sidelkovsky (29 days ago)
Winner of a video, I been tryin to find out about "spread betting tax free countries" for a while now, and I think this has helped. Have you heard people talk about - Miywen Zanila Remedy - (do a google search ) ? Ive heard some great things about it and my colleague got amazing success with it.
Abraham Lincoln (1 month ago)
Great
Fly-Elevated (2 months ago)
Wouldn't Frank have to pay more because of interest accumulated every day from borrowing the money from the broker? Please explain that part to me because I want to understand if you left out the extra payment he would have to pay or this video was just an ideal situation
Sycamore (7 months ago)
well you completely left out that part of you needing to pay off the interest of the loan, and that would make your gain from this whole thing even less
Circuit Breaker (9 months ago)
So the broker didn't make money if he put $150 and got $150 back? I didn't get this part.
vaidas bronusas (4 months ago)
+Julian Overton yes you are very right just some people come to market thinking we make milions we make some but in long run compound intrest and stock prices increse make us money if we sell at time and not try to be greedy otherwise we loose. :)
Julian Overton (4 months ago)
vaidas bronusas If “newbies” didn’t invest at all then we wouldn’t have a stock market. People have to start at some time in their life lol. Well they don’t have to, but they should. That’s like saying “newbies” shouldn’t drive cars because they’re dangerous; in a sense. Lol
vaidas bronusas (4 months ago)
+mdogzino No to mention intrest is bad new people gone think its free :) But newbies shouldn,t invest at all. They come to loose money and it makes sense it helps clever investors get richer :) Margin is good but risky thing currently i got 10 000 pounds margin .
mdogzino (4 months ago)
the broker always makes money on every transections lol. he left it out to keep the video short and easy to understand.
Matt Antinucci (7 months ago)
There are fees and interest attached to buying on margin that the video did not mention. The broker makes money from that.
Mario Delgado (1 year ago)
Wow, this 2 min video answered a question I've had for 2 days. Awesome!
Prachi Saxena (2 years ago)
what will be happen if the price of the share decrease..?
Deepa Shrestha (2 years ago)
what's in it for the broker if s/he makes $150 regardless of the price of the stock going up ?!
Daniel afg (1 year ago)
broker fees, happy clients etc
Andrew Scala (1 year ago)
My understanding is that when you borrow money from the broker, you have to pay interest and fees on what you borrow. This video left that out to simplify the explanation
Alex G (2 years ago)
I'm asking myself this same question, this example does not express the incentive for the broker
Sham Paige (2 years ago)
this videos are all fit to grade 11 student..and its me ..thank you
Sim S. (2 years ago)
This helped me a lot to understand robin-hood gold.
Vladimir Mišin (2 years ago)
Nick Leeson
Tom Maitland (2 years ago)
But I don't wanna buy with margin :(
Darin Tsu (2 years ago)
then just buy stocks without paying on margin if you have enough paper with you LOL
Tauseef Khan (2 years ago)
The pop tone is really annoying distracting
FoodLiquorCool (3 years ago)
I just watched four videos trying to describe this. This is the only one that made sense to me
Emma Smith (3 years ago)
I am a student at a middle school in Cincinnati, Ohio. I would like to use your video for a project I am working on for my class. The project will require me to download and possibly edit out portions of your video. This project will be on a password restricted site so my work will only be published for my fellow classmates to see. Please respond to my reply to accept or deny my request.
Wall Street Survivor (3 years ago)
+Emma Smith Hey Emma, you can email me to chat about how we can help --> [email protected]
Linda Marie Salinas (3 years ago)
Using this video to teach my 11th grade students about the causes of the great depression!
drlme22 (2 years ago)
thats not true
FRONT! Studios (2 years ago)
The results of the stock market crash all together is what caused the great depression.
G00GLE CHR0ME (2 years ago)
Big government people like FRD caused the great depression
I Love You All (2 years ago)
The stock market crash did not cause the great depression. The federal reserve caused the great depression. "You're right, we did it"- Ben Bernake admitting fault for the Great Depression of the fed's behalf
Wall Street Survivor (3 years ago)
+Linda Marie Salinas Hey Linda! Great stuff. We really love getting involved in classrooms. If you wanted to chat more about how we can help out your students you can shoot me an email [email protected] :)
shellnexus (3 years ago)
What do you call Frank in economic terms?
Hawk & Dove (3 years ago)
what stock goes up by a hundred dollars lol?
asdaser (3 years ago)
+Daundrey Belk Amazon went up like 300 dollars this year alone
Nadir Khawaja (3 years ago)
+Daundrey Belk tesla
Matt Dathew (4 years ago)
so the broker didn't make anything?
Cong Vu (2 years ago)
i have the same question and your answers are great
Nanofuture87 (4 years ago)
Fees and interest.
jo23bulls (4 years ago)
the broker takes a small percentage somewhere.
Iven Tu (4 years ago)
great video!
Typical interest rates on margin loans? Subject to FED interest rates? Credit score? LIBOR? etc.? What sets the loan interest rate?
Mr Argyle (11 months ago)
Count MaxwellVonDickstein Every broker/creditor is different. Some use a base + premium with the base being derived from an index like LIBOR. However, margin interest rates are usually never contingent upon the borrower's credit score or profile.
Wall Street Survivor (6 years ago)
Hope you passed :)
Wall Street Survivor (6 years ago)
Please do!!
AQUATICrasberry (6 years ago)
I am currently taking a finance class and I have a midterm coming up. These videos have simplified everything so well, I am no longer worried about the test. Thanks for the great videos!
Deepak Jindal (6 years ago)
tough calculations!!

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