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The Magnifying Effect of Margin

Dashboard > Chapter 10: Trading on Margin > The Magnifying Effect of Margin

The Magnifying Effect of Margin

To Do List


    A Basic Trade to Illustrate the Magnifying Effects of Margin:

    "This is your brain. This is your brain on margin."

    Here's how margin works and gives you an idea on the math behind it.

    MARGIN STORY ONE: You buy 1,000 shares of DOW for $10 a share with no margin. You just pay cash.

    A year later, you sell it for $20. Awesome. You doubled your money.

    You have $20,000. Woot. Compound return: 100%. By the way, here's how you compute returns: (Ending amount – Beginning amount) ÷ Beginning amount × 100...

    Looking for more? Why is this annoying box in the way? It's because you haven't paid for the course yet!

    Next: Short Margin Accounts
    Prev: Introduction to Margin

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