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24

Credit scores are not completely transparent, but when I look at my score there's no mention of the magnitude of any events. Truthfully I have no bad events but the only indication is a count (0), not any indication of size. A bad event is a bad event. It doesn't matter if it's a $10 default or a $10,000 default - it gets reported the same way from what I ...


20

Just open another bank account with a different institution. Walk in, sit down, leave with a new bank account and routing number. (You may be able to do this online with some institutions, but either way you need to fund the new account with some money you already have.) Connect it to your brokerage account. Initiate a transfer of money that covers the ...


17

To put it very simply, a 10X leverage means that if your asset drops 10% you have lost 100% of your money. ABC (whatever the target asset) trades at 10,000. If you only put up 1,000, a 10% drop wipes you out. A 10% rise doubles your bet. At 9,500 you've only lost half your money. The percent loss is literally multiplied by 10. To put it in a formulaic ...


12

With margin you always owe what you borrowed. The gain or loss is all yours. To buy $20,000 worth of Bitcoin you supplied $2000 and borrowed $18,000. The Bitcoin is now worth $19,000 and you still owe $18,000. The Bitcoin lost $1000 worth of value total so you now have $1000 less than you started with. Note most brokerages won't allow you to have such high ...


11

10x leverage means your profits are 10 times more and your losses are 10 times more. So imagine what your profit or loss would have been if you didn't have any leverage. If you would have made $100 profit, then with 10x leverage, you've made $1000 profit. If you would have taken a $100 loss, then with 10x leverage, it actually ends up being a $1000 loss. ...


11

A margin account is effectively debt that is secured against your investments. In general, debt is the cheapest when it is secured against your assets [ie: the lender has the legal right to liquidate your assets to cover off your debt, if you are unable to make payments]. For many people, the most common form of secured debt is a mortgage secured against ...


7

Although margin trading and short selling have in common the concept of borrowing something, they are distinct trading concepts with vastly different outcomes and risk profiles — primarily because the former facilitates a buy, and the latter facilitates a short sale. When you borrow funds from your broker to buy shares, you end up with a long position and ...


7

The losses may be $5 billion but it's possible that not all of the losses have been realized and some of it is still on paper (some of the short positions are still open) - likely ones added later on during the short squeeze). It's possible that there are options in the mix, allowing someone to maintain losing open positions while not totally losing their ...


7

You're conflating several issues and assuming that one is better than the other. OK, one by one: The daily interest cost is the borrow rate times the price of the stock. Perhaps yesterday, GME's borrow rate was 40%. At today's close of $325, that's $35.62 per day which projects to $13k per year. Note that the borrow rate and security price vary so the $...


5

ANY unpaid debt is negative for your credit. That being said, there are so many different scoring models, even by the same bureau, that it's virtually impossible to assess the consequences. Some might place more emphasis on small unpaid debts relative to larger ones, others may look at installment debt default as more serious than auto debt default or ...


5

If a company sees increased demand and can handle it with existing employees, capital and expenses, then it certainly has increased its efficiency (the same resources are producing more revenue). Thus the higher operating margin correctly reflects higher efficiency.


5

Your question assumes that eventually "the price goes back to normal". There is no guarantee that will happen. Short sellers have experienced large losses but also an increase in the risk of further losses, as the stock has become extremely volatile. What was originally a $1 million short position, for example, may have become a $20 million short ...


3

Different brokerage (eTrade), but I got restricted after selling in the evening (in your situation). What counts is not ‘market close’ (which is really only one major market, not all of them), but trading day.


3

If Hedge Fund doesn't have the money and goes bust, "what happens"? Who loses, a brokerage? Individual traders? Government bail out? Their broker is liable for the shortfall. 'You' don't ever buy and sell shares. Your broker does the buying and selling with other brokers, on your behalf. And they have to guarantee every single trade that they do. ...


3

A Special Memorandum Account (SMA) is one that is used to calculate the Reg T requirement in a margin account. If positive, it represents a line of credit for buying additional securities or withdrawing cash. First, some basics first on margin borrowing. If your margin rate is 50% (broker same as Reg T), you can buy $10k of securities with $5k. If your ...


3

I've considered the argument listed in Lifecycle Investing, a book by Ian Ayres and Barry Nalebuff. The argument is that certain investors (who meet certain criteria, such as having a stable income) should lever their stock investments to over 100% when they are young, over time de-lever to 100% stocks, then gradually buy bonds to reach their desired ...


2

Equity trades in the US are settled on T+2 basis, meaning that the actual exchange of stocks vs money occurs on the second working after the order is executed. Assuming the short positions were closed on Jan 13-15 as reported in the press, the trades cleared by Tuesday, Jan 19. The clearing agency for stocks is DTCC which is regulated. The DTCC establishes ...


2

Traditionally, Reg T margin for long purchases is 50% and the margin maintenance requirement (MMR) is 25%. Brokers can require more margin and some who previously were at the Reg T limit raised it before the election due to the expectation of volatility (some raised it this week but AFAIK, just for a limited number of stocks). Your guess of $71....


2

What I don't understand is, what is the overnight fee on - since the underlying assets are neither bought nor sold? The affect of a CFD is supposed to be the same as if the underlying assets were bought and sold except that you get some leverage. So reasoning on the basis that the underlying assets aren't bought or sold is not sensible. The overnight charge ...


2

Your question is full of unrealistic simplifications, confusing statements, and misinterpretations so I can't begin to address it as asked. So let's try another approach. According to Fidelity, the margin requirement for such a position is as follows: The higher of the following requirements: (a) 25% of the underlying stock value, minus the out-of-the-...


2

The two positions have very different investment results if share price rises or falls. In terms of the loans involved: In margin trading, you borrow money from a broker to purchase securities. That is correct and you pay margin interest on the loan. In short selling, you borrow securities to sell them. Still, in both cases, you are borrowing from the ...


2

For example a long leveraged etf may actually go down, even though the stocks it tracks go up, because they use complicated financial instruments to achieve leverage. Typically, such a discrepancy is because of daily rebalancing, not "complicated financial instruments". That is, each day the ETF will go up if the stocks go up, but compounded ...


2

As others have said, the precise details of credit scores are well-kept secrets, so it's difficult to know the exact effect. But simply being in debt is not likely to have a negative effect -- that's what loans and margin accounts are for. Your score is impacted if you fail to pay your debts on time. Furthermore, one late payment should have a minimal impact ...


2

There is no universal "badness" factor to any delinquent debt reported on a credit report and nobody knows the precise effect it would have on any credit score because there are so many credit scoring models in existence and most of them are proprietary formats that are kept secret from as many people as possible (ie. company insiders only will ...


2

For securities purchased on margin, the potential gain as well as the potential loss is increased. The higher the amount of borrowing (leverage), the greater the chance of the position's equity being wiped out and the less the amount of drop in the underlying assets that it takes to get there. A loss of 1/3 the value of a 3x ETF would wipe out the ETF's ...


2

In a perfect world, a broker would notify you that the margin requirement and maintenance requirement are going to be raised, giving you time to increase your margin via adding additional cash or reducing position size. But it's not a perfect world and after a margin increase, many brokers would immediately liquidate positions to satisfy a margin deficiency,...


2

Assuming that your broker allows Reg T margin limits then the margin requirement is 50% for each side (long and short). The minimum maintenance margin requirement is 25% for long positions and 30% for short positions. So you have not run afoul of either. What could be a subsequent problem is if a large component of your holdings were to suddenly have a ...


2

In the US, options settle in one business day and equities settle in two. This isn't a problem if you have a margin account since the broker effectively lends you the money but without a borrow fee. The PDT rule was implemented after the internet bubble during which many people lost a lot of money day trading. Its purpose is to disincentivize people from ...


2

If you take out $100k, your position in VTI cannot drop below $133k (cannot drop more than 55%). Maintenance margin is usually 25%. This means that you cannot owe more than 75% your account's worth. If you borrow $100k and your VTI position is worth $300k, you owe 33% of your account's worth. If your position in VTI goes down in value to $133k, you owe 75% ...


1

Any respectable broker will offer after hours trading. Some require that you request that ability (a formality). Then you can close the position. If the value of your account drops below the maintenance requirement, most brokers will close the position immediately and most certainly, if there's a huge gap and your margin is next to nothing or gone. And yes,...


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