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Margin lending as wealth creation tool

The most important is to have enough money. Whatever theory or Analysis doesn't help without enough money. Without sufficient money, a slight downward movement will make one panick and sell. Without sufficient money, it will makes one think of quickly make back the losses which at the end of the day usually loss more.

 

How many make $$$ ? many rite !! and sudden just one day, S$16 bil is wipe out  liao,  dus mkt crash  in a day.  How many lost $$$ many ppl rite !!, anyone know or knew what can happen tmr ? no risk , no gain, the more calculated risk, the more one can gain, so how many thousand gain or  lost $ and how many win??,  few. maybe U R d one which is exceptional, may the force be with U. Borrowing $$$ from banker to    play or  invest in shares and stocks is a no no for me. maybe in good time like in IPO stocks yah..margin lending and/or trading is good for a stag.

teeth53      ( Date: 29-May-2006 21:08) Posted: Ya lor 95% will lose money, 5% will win but not B4 taking lesson from losing money. I think every one of us have lost before, a lesson to be learn  here. How to recover lost money b4 actually recovering it back. Books and research won't help much, believe oni painful lesson can help (don't try with what ever mean to win back what is lost) lesson, after lesson never been learn, we R after all is human and human make mistake after mistake.

 

Tks so much, this is really a differnt approach of share investing. Do you have any criteria for such stocks? Does it work well for all stocks? I apologise if I ask too many questions! 

 

Always "cover" your positions. If there is a crash, you are ok and just make less profit.

 

Hi ChipChip66,

 

Yes, you are right. For instance ASL Marine consolidated from 90c to $1 so during this 10c range, I accumulate at different prices. Once the share price breaks $1, one can buy more by leveraging to buy at $1.02 and $1.05.

 

Unfortunately I got margin call during the market crash this year and had to let go this stock at 88c:(. I think it is now above $1.70.

 

I always like to buy shares at higher price instead of at lower price to "cover" my positions. 

 

 

Hi Livermore, tks for yr pointers! Will bear them in mind. I suppose you would have bought some stock and when the price moves higher by 10 to 12c, you buy much more. Is it correct? 

 

Hi Fortunegal,

 

I heard about CFD but have not really gone to study about it. Margin leverage is 3 times.Really that is good enough for me.

 

 

 

livermore (or others), is margin lending same as CFD?

my friend is putting $7K into his CFD account and buy the stock up to 5 times...meaning up to $35K. he bought labroy marine at 2.67 recently. i haven't try out yet as it is 'not time' for me (i am not ready yet). i don't think i got the heart to take in 5 times of loss if anything happen. he havent get back to me how much interests is needed to pay.

 

trading_coach, can't hold my curiorsity.... wonder if you are okie to answer my question.. if not, it is okie. are you a teacher teaching TA classes in spore?  i ask cos i think not many ppl will be confident to use the nick trading_coach. :o)

 

Hi ChipChip66,

 

Geojam also averages up in margin. I give myself a 10 - 12c range to average up before the share price breaks out and surges ahead. Then I don't average up any more. I used to think in margin trading you trade short term. After some thought, I realise I gain more by holding for long term. Just don't over borrow and things are ok. Thus I always check my buy limit. I only borrow when I am in profit. That is the key point.  

 

I believe margin lending are for those with deep pockets. In this bull market, margin lending can def help boost kopi$$ 10 to 20 fold at least. The 1st few trades could be in yr favour but when the tide turns and DISCIPLINE is gone, hard earned $$$ could be wiped out in days.

However, I do like Livermore's strategy to average up. This is something I have not considered until now. Will definitely keep this in my strategy book.

Cheers!

 

I guess Warren Buffett would not be one of surelywin's most admired investor.  I guess Warren Buffett would be considered a gambler.  I guess Warren Buffett is such an ass.

 

Hi all,

I am new to Margin Trading; please enlighten me on an example:

If you put in cash let say $1000; you can trade up to $3000; to maintain a margin which is Collateral divide Ledger to be equal or more than 140%. Let say if you plan to buy 3 lots of shares at $0.50 per share which comes up to total $1500; Collateral is $1500 and Ledger is $2000; therfore margin is 75% which is lower than 140% so you have to satisfy force sell call on the SAME day by increasing or top up to maintain 140%...is my calculation correct???

Thanks alot

 

 

Thanks.U are of great help.

will read up

 

Hi there geojam,

A brief example of trading methodology is the posting I have made on UTAC on 31May, linked to the question that was posted as "When??"

This is just a snippet of my methodology (and of course there are many others to look at also) but needs to be part of the complete methodology which includes things like:

- Technical analysis

- A proper trading plan

- Risk Management (the most important of all!!)

- Money management

Added to the methodology you also need experience (some of which can be gained through lots of backtesting) and also the right psychology.

To get started I suggest you head to a book store and start flicking through some books on technical analysis - a good way to get an overview.

Hope that helps.

 

Hi

Can u share some of your trading methodology that u use?

Can it be all those charts etc....

 

I don't see myself as a trader or day trading or as a long term investor, Usually when vested in IPO, i go for a stag, at most 2-3mths (not for long Term) some stocks that i got stuck , R all condem liao, sought of write off to 0 value. Good one i tend to keep longer to collect dividend 1st, then d next 2nd dividend and so on and some times it end up getting extra bonus, in good times can collect $30k win in a year after ave off, but now it seem even one can win 30k over 3-4mths, tomorro (one day oni)one can lose 30k + another 30k. Win or lost. I am just a small, small fish among many big white sharks.

 

Margin lending is just one of many leveraged products/tools/instruments available to the investor. Such tools should not be used unless you have 3 things:

1) The right trading methodology;

2) Experience in the market;

3) The right pyschology as a trader.

In short, you need to have a proven track record trading stocks before you can consider any kind of leveraged instrument, otherwise it is a good way to go broke very quickly.

The successful trader, however, can make a lot of money, using leveraged instruments, with very little risk, if he/she has the above 3 critical elements.

As a brief example, a good trader can be leveraged up to 50:1 or even 100:1 on instruments such as CFD's, forex, and futures, but with less risk and massively higher returns than 90% of people who buy stocks directly from the market. Why?...

1. Methodology

2. Experience

3. Pyschology

If you are not bullet-proof in all of the above 3, then stay away from leverage.. simple.

Sorry for repeating myself, but I am very passionate about this!!

 

Hi teeth53

I like to correct myself.

The 95% that loose money refers to the ones that trade in shares.That is they speculates.

There is no statistics for investor or long term players.

Also another statistic,if u are a trader,u are very good if u can get 3 out of 10 trades u make rite.And it also says that if the 3 u got it rite u should hold it and ride the wave.

btw,are u a trader or an investor?

 

margin call 140%.. forsed sell when lower than 130 %.. keep your safe distance, should be OK. buy doule your cash amount, when price stable, margin is 200 %, buy 3 times, margin is 150%.. very rsiky to buy 3 times cash..