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The Downside of Margins

Dashboard > Chapter 10: Trading on Margin > The Downside of Margins

The Downside of Margins

When Things Go Awry: When Bad Things Happen to Margined People

Margin accounts are for big boys and girls, no tears. And while brokerages rarely lose money on margin accounts, clients lose all the time because they are forced to sell (or buy, in a short margin account) when the market turns against them. In the case where the S&P is at 1,500 and the client has made a 50% margin bet that the S&P will go up, should the S&P drop 5%, the client would be forced to sell shares until the proceeds...

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