Customer Reviews

Margin Trading from A to Z: A Complete Guide to Borrowing, Investing and Regulation (Wiley Trading)

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The author does a good job in this book of showing how margin works. He does this with specific scenarios showing what your account looks like after taking a stock position on margin. The book breaks down what your equity market value is after a purchase and what your debit and equity balance looks like. You will also see how these change with the fluctuation of the market value of your equity. The book shows what the minimum equity requirement is to maintain a position on margin before you get a margin call. The book explains the anatomy of how a short sale works in a margin account. He discusses the minimum cash requirement for pattern day trading ($25,000) and how you can use the maximum amount of margin to day trade by always getting out of your positions on the same day you purchase an equity. The book has an outstanding chapter on options, really explaining how they work along with their margin requirements for trading them. There is also a chapter on what is called a portfolio margin account, which allows for much more leverage than the traditional 50% margin account requirement. This type of account adjusts margin based on risk, you can hedge your positions by holding put or call options that insure your holdings and minimize your risk. Doing this inside a portfolio margin account allows you to 10 times leverage of more due to the low risk position. (However this type of account has large capital requirements of $100,000 or more). This book is for beginners, and I would recommend reading it if you want a better understanding of how margin works. If you plan on being a day trader you will need a margin account to be able to trade enough size to profit daily.