MARGIN
Stock market sinks when there's FED Rate hikes.
Why?
Because it hurts stock investors who use margin on their investment as the borrowing rate is more expensive.
Long Term investor's typical yearly target return is between 10-15%.
Higher borrowing rate would definitely hurt the goal.
That is why long term investors would not use the margin on their Long portfolio.
Then what's the benefit of using margin?
1. Day traders have no option but to use the margin to keep the Cash level.
2. Short term traders will have more buying power to boost up their short term investment.
Here's simple math:
You have $10k.
With Margin, your buying power = $10k + $10k = $20k.
Let say you bought GOOG for 1000.
You could bought 20 shares with margin rather than 10 shares.
When stock goes up to 1010 next day which is 1% up.
Your gain is 1% from total buying power but actually 2% gain from your principal.
1 day borrowing is almost nothing in interest as the portion is too tiny...
However if you were going to hold more than a week or a month....
The interest rate would hurt your overall profit.
My system's given me the consistent steady profit YoY or MoM so I never had a challenge of using the margin in my investment.
Margin's for the short term investment and it's very helpful to boost your profit if you use it wisely.
SHORT
This is opposite of LONG.
Haha. Simple, right?
Margin's to borrow the money but Short is to borrow shares from someone.
You think GOOG is going to drop and you want to make money off of it.
How?
You Short the stock.
Here's how it works.
You sell GOOG stock by borrowing someone's share.
So technically you are selling GOOG using somebody else's shares.
Or you could say you are selling for them. hmmm I am not sure if this is right terminology.
Anyway you sold GOOG for 1000 and it's dropped to 980 next day.
You want to take the profit from the short at 1000.
You need to buy to cover the short.
Do you remember that you borrowed the shares from someone?
You need to pay back, right?
That is called buy to cover.
Once you buy GOOG at 980 to cover the short, you book $20 profit per share.
Easy, right?
6 Comments
알아들었어요.마진은 이자를 내야하고 숏은 이자가 없나요?숏은 판주식을 사면 돼니 이자는 없네요.
ReplyDelete아...위에 제가 못 적었네요..이제 보니.
DeleteShort는 마진으로만 빌릴 수가 있으니...마진 이자가 적용이 되죠.
또 덧붙여서 빌리기 어려운 주식들이 있어요...
주로 모멘텀이 매우 강한 주식들이겠죠.
그 경우엔 마진 이자 외에, 주식을 빌리는 코스트가 또 늘어납니다.^^
하지만...저의 경우는 거의다 길어야 이틀내에 거래가 종결되기 때문에, 그 이자율이나 코스트는 거의 감안하지 않을 만큼의 포션이라 개의치 않는 편입니다.^^
오늘도 배우네요 ^^ 시간내서 글을 써 주셔서 너무 감사합니다~ 행복한 주말 되세요!! ❤️
ReplyDelete하루하루 배우네요.배우고나서 시작해야하는걸 일다 발을 들여놓고 배우려니 모르는것 투성이라 ......감사합니다.
ReplyDeleteSVM System Manual을 완전히 숙지하실때까지 읽고 또 읽어보세요.^^
ReplyDelete감사합니다~~
ReplyDeletePost a Comment