So, what would be the outcome of a situation where an individual were to buy 100,000 dollars worth of stock in a well-established company?
Obviously, if it went up a percentage, you'd make 1 thousand dollars, but it it went down 1 percentage, you'd lose 1 thousand dollars.
Are you telling me that people gamble every day with large sums of money in hopes that it goes up a percentage point?
>>1857407
You'd probably be trading on margin if you had that much money and wanted to invest in a single company's stocks. You'd be able to handle the margin calls with your reserves if shit goes against you, and you'd be getting a lot more money out for what you put in if shit goes your way.
>>1857450
So, people offset their bets with other bets?
>>1857460
I wouldn't call it betting. Trading on margin is the broker essentially lending you money (at price) to trade with. The broker will carryout a margin call if the price of what ever you bought with that borrowed money falls below a certain level. The term 'Leverage' is more appropriate when trading on margin.
>>1857485
*(at a price)
>>1857485
explain more?
>>1857653
this seems foolish
>>1857716
Well if you've got a decent amount like 100k, you may as well try with a few thousand.
>>1857754
So, there's less risk, but more fees charged, and a higher pay out?
>>1858195
Dude it's asking for a loan to gamble away basically. Stay away from that shit.
>>1858195
It's not less risky.
Let's take OP's $100k investment in a single company, but using a margin account instead of putting all your own money in.
To have a $100k margin account investment, the broker will require you to put in at least 50% (i.e. $50k), this is known as 'Initial Margin'. The broker will then allow you to borrow $50k. This gives the total $100k investment.
Your own cash % must make up at least 25% of the total investment, at all times (this is known as maintenance margin). Your cash % is calculated as: (Current Total Investment Value - Borrowings from Broker) / Current Total Investment Value * 100.
Let's say the price decreases by 50%. The Current Total Investment Value goes from $100k to $50k. Your cash % is now: (50k - 50k) / 50k * 100 = 0%, which is below the Maintenance Margin. The Broker will perform a Margin Call which means you'll need to put in more cash to bring your cash % up to 25% ($12.5k / $50k * 100 = 25%). If you don't respond to the Margin Call, then the Broker will begin to sell off your shares.
If you had invested your own money entirely instead, you would've lost $50k, but that would be it. With a margin account, you've not only lost $50k, you also have to put in an additional $12.5k to meet the Margin Call.
A Margin Account gives you leverage (allowing you to invest more than you would be able to otherwise), and can magnify gains. But it can also magnify loses.
>>1859039
>>1858454
Not to mention each broker charges you a certain percentage for using margin and some markets let you get 10x leverage.
Really makes insider information dangerous as you have connected guys becoming overnight millionaires using shell companies.
wait a minute lad, what
>>1857528
They literally have charts that say what the stock price has been doing for the last 12 hours
>>1859039
Yeah but what are the odds a Fortune 500 company is going down 50%
>>1860087
What are the odds that a person buying stock causes point changes?
ITT;
idiots trying to explain things to bigger idiots
all you kys
>>1861279
>arrogant jerk off thinks he's smart
sad!