How to Trade on Margin

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Trade on margin by qualifying for a margin account with a brokerage house and finding a secure equity to invest in. Prepare to pay fees and costs for an equity when trading on margin with information from an investments manager in this free video on investing.

Part of the Video Series: Stocks, Bonds & Investments
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Video Transcript

So how to trade on margin. If you qualify for a margin account with your brokerage house -- and not everybody does -- you will have basically a credit account where you can go and buy an equity without having the money. You will have a given amount of time to bring that money back into the brokerage house. Also, too, even if you make a quick gain on the equity that you purchased, you won't be able to sell it right away because there's a free-riding law, so you can't...you can't just buy and sell and avoid the margin account that you need to pay off. So if you buy on margin, you need to pay off. So if you buy on margin, A, you need to qualify for a margin with your brokerage house. B, look for, you know, a safe, secure equity because you are liable for those charges with the fees and the cost of the equity itself. And just make sure that that margin account will be paid off in a timely fashion. And again, just be aware that the margin account and use of a margin account can be very risky. If you buy an equity and you don't make any money on the equity, it goes down in value -- it could go to zero -- you still have to pay for the equity that you purchased. So your initial purchase price and fees are all still do, so it's a fairly risky move, but it can be done. And again, just make sure that it's something that you can qualify for through your brokerage house.

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