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But even if you pay the $9-$15 for their Gold account, you still can only get on margin the amount of capital you have in the account max ie: if you deposit $5

by SEJeff 10y ago

But even if you pay the $9-$15 for their Gold account, you still can only get on margin the amount of capital you have in the account max ie: if you deposit $5 and have $5 of cash on hand in your robinhood, but own ~$1200 of stocks, you can use < $1200 of "Gold" which is what they call margin money. It is explained quite well here: https://support.robinhood.com/hc/en-us/articles/213262686-Robinhood-Gold-Buying-Power https://support.robinhood.com/hc/en-us/articles/213262686-Ro... Note that I am a robinhood user and do not use gold or any margin investing. I use it for speculation for long term stuff and have the rest in boring index ETFs / funds primarily. I think the entire idea of investing on margin as playing with fire when you lack fireproof gloves.

JakeAl 10y ago
Investing or trading on margin is intended to allow you to trade while you are waiting for previous trades to settle. It's not meant to be a loan, but it is exploited that way by both banks and traders at their own risk. It's simple enough to fix, only allow margin to cover the amount of money waiting to be settled. In other words if a trade hasn't settled then the funds are not available for trading.
- yellow_postit 10y ago
  I've not heard this history before, is there a source you can point to? I'm interested in the history of financial instruments.
- charlesdm 10y ago
  Margin can be powerful as a wealth building strategy, when interest rates are low. Risky? Yes. Profitable? Sometimes, if you've done your homework. I don't think you can be a consistent good stock picker, HOWEVER, there are certain companies you just know will do well because they're closely aligned to the industry you work in, for example. "Doubling down" using margin (borrowed at 1-2% per year, not 8-10%) can (maybe, sometimes, not always) be a good strategy.
  - eru 10y ago
    If you can borrow at 1-2% a year, it's almost a no-brainer.

by SEJeff 10y ago

JakeAl 10y ago

Investing or trading on margin is intended to allow you to trade while you are waiting for previous trades to settle. It's not meant to be a loan, but it is exploited that way by both banks and traders at their own risk. It's simple enough to fix, only allow margin to cover the amount of money waiting to be settled. In other words if a trade hasn't settled then the funds are not available for trading.

yellow_postit 10y ago
I've not heard this history before, is there a source you can point to? I'm interested in the history of financial instruments.
charlesdm 10y ago
Margin can be powerful as a wealth building strategy, when interest rates are low. Risky? Yes. Profitable? Sometimes, if you've done your homework. I don't think you can be a consistent good stock picker, HOWEVER, there are certain companies you just know will do well because they're closely aligned to the industry you work in, for example. "Doubling down" using margin (borrowed at 1-2% per year, not 8-10%) can (maybe, sometimes, not always) be a good strategy.
- eru 10y ago
  If you can borrow at 1-2% a year, it's almost a no-brainer.