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Buying power question
Posted on 2/2/21 at 7:03 am
Posted on 2/2/21 at 7:03 am
Why is my buying power different with pink sheet/otc than other stocks? My cash/margin ratio is different. What’s the deal?
3
Posted on 2/2/21 at 7:21 am to Masterag
Bump
Posted on 2/2/21 at 7:23 am to Masterag
When you are buying on margin, the brokerage will adjust your buying power depending on the risk and volatility involved in the underlying security you are trying to buy.
Posted on 2/2/21 at 7:25 am to Masterag
Stocks have different margin requirements based on their riskiness/volatility.
Something like Apple May be 30% margin requirement because the risk that Apple drops significantly overnight is low, whereas the odds of a penny stock cutting 50% or more in a day is pretty significant so it may be 100% margin requirement. If the stock moves too fast for them to liquidate you, then the broker is left trying to collect what is an unsecured debt from you, and they likely won’t be very successful.
Also - don’t screw around with penny stock and don’t screw around with margin if you do not understand it.
Something like Apple May be 30% margin requirement because the risk that Apple drops significantly overnight is low, whereas the odds of a penny stock cutting 50% or more in a day is pretty significant so it may be 100% margin requirement. If the stock moves too fast for them to liquidate you, then the broker is left trying to collect what is an unsecured debt from you, and they likely won’t be very successful.
Also - don’t screw around with penny stock and don’t screw around with margin if you do not understand it.
This post was edited on 2/2/21 at 7:27 am
Posted on 2/2/21 at 7:32 am to southernelite
Thanks for the replies, guys. I’m trying to better understand the penny stock game.
Posted on 2/2/21 at 7:35 am to Masterag
quote:
I’m trying to better understand the penny stock game.
Watch the wolf of Wallstreet
Posted on 2/2/21 at 7:43 am to Masterag
Likely these securities aren't marginable, e.g. 100% maintenance requirement.
Posted on 2/2/21 at 8:39 am to Masterag
quote:
Thanks for the replies, guys. I’m trying to better understand the penny stock game.
I wouldn't recommend learning the game using margin
Posted on 2/2/21 at 6:23 pm to oklahogjr
But if I don’t use margin I can’t buy pennies, correct?
Posted on 2/2/21 at 6:25 pm to Masterag
Yes.
You can use settled funds
You can use settled funds
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