What is the difference between a margin and cash account for stock trading?
Jason аѕkеԁ:
I’m using E-Trade, whаt іѕ thе ԁіffеrеnсе (іn general іf уου wish) between a cash trading account аnԁ a margin trading account?
I’m using E-Trade, whаt іѕ thе ԁіffеrеnсе (іn general іf уου wish) between a cash trading account аnԁ a margin trading account?
Tags: Stock Trading
Margin trading is when you borrow money (from a broker) to buy stock, the investment (stock) is held as collateral.
Comment by pagodaboy2001 — November 29, 2008 @ 3:47 pm
I believe trading on margin is borrowing money to trade. Trading on cash is using money that you invested in your account.
Comment by brianpadley — December 1, 2008 @ 12:11 pm
margiin= buy with 50% of selling price as example
cash acct=buy with 100% of selling price as example
that be the difference
Comment by betotron don — December 2, 2008 @ 8:35 pm
A cash account is where you pay for the Stocks with 100% cash.
A margin account is where you only put up a percentage of the purchase price of the stock (say 30%), if the stock goes down in price, you will have a “margin call” where you have to put more cash in to keep the leverage at 30%. It’s basically a way to try and make an investment without putting up all the cash, like buying a house with 20% down…
Comment by mizzykizzy — December 5, 2008 @ 6:59 pm
The first two answers were correct, but one other difference is that with a cash account you have to keep in mind the settlement date. In a cash account you must wait three days after the sale of a stock before the money from that sale is available to make further purchases. In a margin account the money is available immediately after the sale.
Comment by Mark S — December 8, 2008 @ 5:59 pm