The Dangers Of Using Margin

In this video, I’ll explain how margin works.
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0:00 - Intro
1:03 - What is margin
Buying on margin means, borrowing money from the broker to use the stock. Margin means collateral, and the collateral is your stock. If you can’t afford to pay back your margin loan, the broker will liquidate your stock to get back the money.
If the initial margin requirement is 70%, you will need to come up with 70% of the money yourself, then the broker will lend you the remaining 30%. Using a margin loan will amplify your gains or loss.
3:43 - How margin call works
After buying the stock you will need to make sure your equity portion stays above the maintenance margin. If your equity portion goes below the maintenance margin, you will be margin called.
www.firstrade.com/content/en-...
5:10 - Margin requirements are different for every broker
Different brokers will have different margin requirements.
5:49 - Margin loan interest
IBKR charges 1.58% interest, IBKR SG charges 2.58% interest, Tiger Brokers interest is 4.08% and moomoo charges 4.8%.
6:26 - Real life example of margin
SMA or Special Memorandum Account is your margin loan quota before you get margin called, so always make sure SMA is more than $0.
8:04 - My thoughts
Margin trading is a very dangerous thing, while it can give you higher returns, it can make you lose a lot of money. So, I would not recommend you to use margin unless you absolutely know what you are doing.
And even if you use margin, don’t go and use up your entire quota, always assume that the market can crash 50% tomorrow. If you want to use, probably just use 10-20% of your margin and you should be alright.
None of this is meant to be construed as investment advice, it's for entertainment purposes only. Some of the links and other products that appear on this video are from companies which Kelvin Learns Investing will earn an affiliate commission or referral bonus.

[@leonyap27]

Kindly share more Margin on Option (PUT/CALL) details related to Tiger Platform. Thanks!

[@ron2040]

Voting it too

[@sushees8595]

same need to know how margin works on Tiger. Not just on Options. Seems like different brokers use different terms which makes it confusing. Thanks @Kelvin Learns Investing

[@Jinsh0]

Exactly what I need to.. If you can, it will be great Kelvin.. Thanks..

[@kannanragupathi4651]

Yes, please i'm voting it too.

[@noapples6060]

I love how you are not hesitant to show all your details and new worth to be able to clearly explain everything. Us investors are brothers in arms to take more money from big companies

[@jackcylow]

Pls do a video on margin for selling options. Thanks!

[@Explodingstrawberry125]

Thanks for the simple explanation! And really appreciate the use of memes

[@kelvinlim9694]

Hi, Kelvin,What is sma for think or swim? Any idea?

[@iwanhertono696]

Thanks Kevin, is there a way to opt not to use margin in tiger broker or TD Admeritrade?

[@brianrachmat3492]

Hi Kevin may I ask you about interactive broker statement : interest accrued $88 or MTD interest $88 is that mean a profit or a loss for me? Thank you Kevin.

[@filmorder8437]

Can you do a video on Tiger Broker terminologies too please?

[@jonzhuang]

What is IBKR SG version? And I have never seen my IBKR statements deducting interest fee. My margin is currently at 1.22.

[@DylanInvestingInLife]

Hi Kelvin! Thanks for the informative video. I have a question about margin loan IBKR. If I have 50k in stocks(no cash), can I buy stocks using margin without cash at all since I have 50k in equities or I must pay maybe 40 percent cash and 60 percent margin? Quite blur blur for this part. Thanks!

[@banumurugan4908]

Hi Kelvin, TWS is important to do Option Trade at IBKR? or it can be done at IBKR app itself without TWS?

[@Liquidity-inefficiency]

Nice lecture. SMA 0 and EXL 0 happened at the same time? Does it mean we only need to watch out either sma or exl ? Owning 100 tsla and sell a tsla put would trigger SMA 0?

[@namelessboy55699]

Thanks for sharing. I noticed the margin loan rate for IKBR has gone up to 3.08%? so it subject to change by the broker.

[@banumurugan4908]

HI Kelvin, I have plan to do option trading @ IBKR but need to learn many things... If i join , how can you support me? DO you guide me how to use IBKR?

[@pnteo]

I got Initial Margin in my Tiger broker account, the stock price that trade in option buy/sell + margin , total price is huge

[@wanglong91]

Hi Kelvin, thanks for sharing! Is there an option to not use margin for buying stocks when we switch to a margin account on IBKR? Thinking of using margin just to meet my margin requirements when buying options, but not to use it for buying stocks so that I can avoid paying interest/risks of margin call

[@doctorsays.]

Do we have answer for this question? wanna know as well

[@Jinsh0]

Thanks, this really help.. Can you also do it for Tigee Broker too.. As well as margin/leverage in regards to Options.. Seem if you sell PUT, and the stock price drop enough, you can suddenly have leverage (while you dont have leverage when you initially sell the PUT)..

[@plkm89]

Really want to find out this too

[@MC-hb2ib]

Thanks for doing the video, Kelvin! I am also using IBKR but I do not see any SMA field. I went to the Margin tab on my HP and there are these fields: Current Initial Margin Current Maintenance Margin Projected look ahead initial margin Projected look ahead maintenance margin Projected overnight initial margin Projected overnight maintenance margin Need advice on how to read all these and which one is SMA! Thanks.

[@kkvictorng2707]

Are you using TWS(desktops program) you might need to unhide more fields.

[@0hmannn]

Excess liquidity in IBKR

[@plkm89]

Hi Kelvin, would appreciate if you could share how you trade or selling put option using margin, safely 😂

[@valuabletips560]

Very informative video. If you have 400k maintenance margin does it mean you have 400k of margin minimum? Ibkr rates looks quite good at 2.5% highest inflation rate, seems like literally free money

[@KelvinLearnsInvesting]

Ya, that's right. It's considered free money, but i'll assume my portfolio can drop 50-80% in 1 month, so i won't fully use all my margin

[@eightfoldsg]

I noticed your IBKR account # is shown at 6:31 not sure if it's a concern for you

[@KelvinLearnsInvesting]

Ah, thanks for letting me know! Not a concern :)

[@accqpqp2339]

can you share your stocks portfolio holdings just like chicken genius did? thanks, just curious

[@KelvinLearnsInvesting]

Right now, there's no change from my previous portfolio, i'll make as soon as there's a change

[@lipglossOne]

Yay for the LotR reference. LotR is my precious. Happy Monday!

[@KelvinLearnsInvesting]

Happy monday ahhh!

[@lipglossOne]

@@KelvinLearnsInvesting @Kelvin Learns Investing Kelvin, I failed my primary school maths, 4:25 I don't understand why price drop by 30%, equity would drop to 28.4%. 🤕😳

[@KelvinLearnsInvesting]

​@@lipglossOne Originally $10k = $5k margin + $5k cash right. Stock drops 30%: $7k = $5k margin + $2k cash Cash becomes 2k / 7k = 28.6%

[@lipglossOne]

@@KelvinLearnsInvesting Oh. 明白了。Tanks. 😁

[@jkalmon]

Can you do a video on what are the risks of using hodlnauts USDC/USDT interests

[@KelvinLearnsInvesting]

Here you go: kzbin.info/www/bejne/pV7HnpRrqKqeo80

[@jjking1322]

Hi, let say I have Long sell put in tiger which expiry on 2023, currently the strike price are above current stock price, while my acc do not have such money yet. Am I consider under margin? Or only if the seller execute the sell put?

[@bloggeraldwin]

Yes

[@KelvinLearnsInvesting]

If you are long, you don't need collateral, this menas you are not on margin. Seller can't execute the put, only you, the buyer can execute

[@kkvictorng2707]

I think you meant you have a long expiry for a sold put option. I suspect you have minimal margin requirements as you are not near expiry and your broker not expecting assignment for you even if it's ITM. At least that's my experience with IBKR.

[@jjking1322]

@@kkvictorng2707 thanks for the reply! :)

[@jjking1322]

@@KelvinLearnsInvesting thanks kelvin!

[@SS081985]

Huat Super Big Big or POK Big Big

[@KelvinLearnsInvesting]

Huat ahhhh!!

[@densor9870]

Margin loan (cash) @ 1.58% then stake your favourite crypto @ xx%

[@specialproblem5459]

+1 for the algo

[@Samuel-qe9lj]

Margin call mean you are fuck if you don’t top up … unrealised become realised… become Hin Leong lol

[@lvpatfleming7465]

Comment

[@KelvinLearnsInvesting]

Reply

[@iphonesamsung9944]

Kelvin Koko is so rich

[@KelvinLearnsInvesting]

Nah, it's just a combined portfolio of my family, not just mine

[@kkvictorng2707]

@@KelvinLearnsInvesting but it grow from 250k? The previous time you talked about it.

[@jakesontiano]

Wtf are you saying