Willing to magnify the stock gain? A magical trading practice you must know…

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AInvest Front Line
Wed, Sep 7, 2022, 1:48 AM ET  ·  1 min read  ·  0 view

Margin Trading

Have you ever thought about magnifying multiple times of your original stock gain? Deposit and invest more? Not Really! Margin trading can make it possible without any additional investment!

In simple words, margin trading refers to the practice of borrowing to invest, and margin is the money that an investor borrowed from a broker to trade. And it is also called leverage trading, which will tend to amplify both your portfolio gain and loss.

Suppose AAPL's share price driven by advanced products released increased by 10%, and you purchase $20,000 ($10,000 by cash + $10,000 by margin) on AAPL. Then the unrealized gain would be 20% rather than 10%.

Initial Margin & Minimum Margin

The initial margin is the percentage of the purchase price of a security that must be covered by cash when using a margin account. For example, a 50% initial margin means an investor will have $20,000 purchasing power if he/she initially deposits $10,000 to the margin account. There is also a minimum margin required for an initial deposit and usually set at $2,000.

Maintenance Margin & Margin Call

Maintenance margin is the minimum amount of equity that an investor must maintain in the margin account after the purchase has been made, and it's usually set at above 25% of the total value of holding securities in the margin account. The investor may be hit margin call if the current value of equities falls below the maintenance margin threshold. In the scenario of a margin call, The investor is required to deposit money into the account or mandatory to close out positions to bring account value back to the minimum required level.

AInvest Margin Trading Account

AInvest Brokerage Service provides margin trading accounts with an attractive offer for customers. Going to the "Trade" tab, click "Open account" and select "Margin" to start your leverage trading.

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