What Is Margin Trading? The Following Are Examples And Examples

What Is Margin Trading (Brice mars image - Unsplash)

YOGYAKARTA - Margin trading is a service for ease of investment. Curious about what the trading margin is? Let's follow the explanation!

Margin trading is a means of the securities industry that provides convenience for investors with small capital. Not only that, if you have the guts to be quite large in investing, this service is very profitable because it can serve the purchase of stocks in an upward trend.

Margin trading is a securities or broker industry service by distributing loans to customers so that they can be used to buy stocks in larger amounts than the funds they have at that time.

Thus, the margin of trading is a capital for investors to gain greater profits through stocks whose value is increasing when they themselves do not have enough funds to buy.

There is also a trading margin repayment scheme, namely, when the loan is due, investors are required to pay a margin debt by depositing funds to their accounts. Not only that, they will also be subject to loan interest. If it fails to pay or default, the consequences are that the share ownership is automatically liquidated to cover losses. One of them is by forced selling.

Examples of Margin Trading

An example of trading margin is when an investor only has a nominal amount of funds in an investor account of Rp. 200 million, he can only buy shares at a price of Rp. 40,000 as much as 5 thousand shares. But if he uses this financing system, for example with a bonus of Rp. 200 million, the number of shares he can buy will increase to 10 thousand.

There is also a calculation of the margin of trading of his shares which will be highly determined by market fluctuations. For example, the initial share price was IDR 40 thousand, up to IDR 50 per share. Until the total profit reached IDR 100 million.

But if in fact there is a price shrinkage, the risk he must also continue to be large because the purchase of shares is tried with more margins. Therefore, carefully consider whether you will buy in greater quantities using bonus funds or not.

Profits And Loss Of Margin Trading

When before using the service, first identify benefits and risks that can be obtained. There are also benefits and losses in trading margins, which are as described on this basis.

Risk Of Fail To Pay

Losses

So after knowing what margin trading is, see other interesting news on VOI, it's time to revolutionize news!