margin account

Pwedeng Umutang sa Broker Mo?

Hi! I just landed in Hong Kong. It was a crazy trip kasi family kami umalis pero magkakanya kanya kaming gala as per a not so smart suggestion ng kapatid ko. So I’m literally stuck with her kaya madaling araw pinaplot nya mga pupuntahan namin mamaya. Yung bottle ng beer na nakikita ninyo sa kanya yan.

Goodluck bukas kung saan kami makakarating. Family breakfast lang ang need na kumpleto lahat as well as family dinner. The rest kanya kanya na. Bunso ako in other words alalay ako ng ate ko.

Enough about me. This blog post is about Margin Account. What is a margin account? A margin account is an account offered by brokerages that allows investors to borrow money to buy securities. Sa tagalog, pautang ng broker mo na pera. Gulat ka noh? hahaha.

Maganda ba o panget ang margin account? Safe ba o hindi? Lets try to analyze para maiwasan maging ignorant. Kung bumili kang stock na worth 100,000 pesos at umangat ito ng 20% you would have 120,000 pesos. May kita ka na 20,000 pesos. Pero what if pwede kang humiram ng another 100,000 pesos eh di 40,000 pesos na tubo mo. Kabaliktaran naman mangyayare if natalo ka. Doble din.

According sa ito ang risk at reward.

RISK. The biggest risk from buying on margin is that you can lose much more money than you initially invested. A loss of 50 percent or more from stocks bought on margin equates to a loss of 100 percent or more, plus interest and commissions. For example, let’s say you buy 2,000 shares of XYZ company with $10,000 of your own cash plus $10,000 in your margin account at a cost of $10 a share. That’s a total of $20,000, excluding commissions. The next week, the company reports disappointing earnings and the stock drops 50 percent. In that scenario, you lose all of your own money, plus interest and commissions. In addition, the equity in your account has to maintain a certain value, called the maintenance margin. If an account loses too much money due to under performing investments, the broker will issue a margin call, demanding that you deposit more funds or sell off some or all of the holdings in your account to pay down the margin loan. If markets or your overall positions decline, your broker can liquidate your account without your approval. That’s an important downside risk.

Rewards. Of course, if an investment purchased on margin does well, the gains can be richly rewarding. Besides using a margin loan to buy more stock than investors have cash for in a brokerage account, there are other advantages. For instance, margin accounts offer faster and easier liquidity. For example, investors can usually only withdraw cash from a stock sale three days after selling the securities, but a margin account allows investors to borrow funds for three days while they wait for their trades to clear.

When you buy securities on margin, you are able to leverage the value of securities you already own to increase the size of your investment. This enables you to potentially magnify your returns, assuming the value of your investment rises. Margin can magnify your losses just as dramatically as it can boost returns.

I know a lot of gurus who trade on margin. Minsan na aamaze ka bakit ang laki ng mga accounts nila but most of them either nagmamanage ng account ng ibang tao or cellectively manages funds from different people or they are on margin. Some of them might hate me for spilling this haha. This is what a margin account look like sa col financial.

To help you out even further I screenshot the COL Margin Guide para alam ninyo lahat ng meron tungkol sa pag utang ng pera sa COL. Here:

Di buo ang list ng stocks since di ko screenshot lahat. If you are really interested you can download this sa Col Financial website.

What’s my take on this? It can increase your wealth faster pwede ka rin nitong gawing broke faster. For me the question should be about your performance rather than maganda ba or not ang margin account. If you have been trading for a while at maganda naman performance mo pero wala kang other source na pagkukunan para mas mapabilis paglaki ng port mo then go for this. If wala ka pa na establish na magandang performance or system at gusto mo lang sumugal na baka sakali mag tsumamba ka I suggest wag na lang.

As for me? I don’t have a margin account. I trade with my own money. I just don’t like added pressure to perform plus I’m not really into this utang thing. Personal choice ko lang yun. When I started my business I actually had a very nice business plan and I was granted a loan since medyu malaki capital need ko noon and I don’t want mys sister or my parents to have a say or control sa business ko kaya hindi ako humiram sa kanila. It was worth it naman. So speaking of my port, I bought something kanina. Yes, I do practice what I preach kasi EOD ako bumili. Will this stock go up bukas or next week? I dont know. i don’t really care. I care a lot about executing my strategy. My buys at my exits. Whatever ang result nun gain man or loss hindi sya kasing halaga ng pag execute or di ko pag execute ng strategy. Usually naman if na eexecute ko maayos nag gain ako or if loss man konti lang. Some years ago na hindi ko pa maayos ayos ang execution doon ako grabe mag loss. After kasi bumagsak ng stock na inaasahn mo na tumaas parang automatic yung emotion na maghohope ka na umakyat. Di mo maexit kasi naghohope ka na umangat. I don’t do that anymore. I buy. If magdaytrade ako or EOD na bili laging nasa chart yung focus ko while yung sa account ko nakaready na sell order. Pag hit ng sell signal automatic sell ko at neer na silipin ulit ang stock until maybe three days after.

That’s it for margin account. I’ve been getting a lot of traffic in this blogsite lately si I guess a lot of traders are reading my posts. I go by the name GANDAKOH. I’m a stock trader. My advocacy and mission is to help traders for free. I will put out a lot of lessons in the coming days as well as explain a lot of things in stock trading sa PSE na set up.

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