JONNY B asked:
$2000 is required to have a margin account but what happens if my account falls below $2000 or if i use all of my cash balance to buy otcbb securities (non-marginable securities)
would i get a margin call?
& if i decide i no longer want to have a margin account can i just switch back to a cash account?
(if there is anything that u think i should cautious of b4 opening a margin account pls tell)
thanks
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you should be aware of the size of your liabilities if you are playing margin game .
margin calls are one of the highest rise / fall ratio so r the risks
buying stock on margin is what caused the crash of ’29.
NEVER buy on margin. the only real margin is marginal common sense.
Here is the thing why I don’t use margin. You have $1000 in cash and you borrow another $1000 in margin. The stock takes a dive but you think it should recover. Lets say in an extreme situation (but it happens often!), the price gets cut in half. The brokerage won’t wait and they will sell it to protect their money!
So they sell, take their $1000 back and you are left with $0 AND you have to pay the interest for borrowing the margin money which is probably 10%. If you don’t have the money then you shouldn’t do margin. Margin is for highly advanced investors. I have invested for 10 years and I don’t do it.