Trading 101: What is a Margin Account?

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Trading 101: What is a Margin Account?
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There are two main stock trading account types: cash account and margin account. The one that most new traders are unsure of is the margin account. In this video I will talk about what a margin account is and how it works, particularly in regards to leverage money.
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Опубликовано:

6 янв 2017

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Комментарии : 812

@lucasvasquez3764 4 года назад

Love how he treats his audience like we are intellectually challenged, and he's absolutely right!

@claytrader 4 года назад

I treat my audience like I treat myself lol

@VeryUnepikGuy 3 года назад

This comment makes my day!!! So true in my case...

@wiredawg2005 3 года назад

I'm also good with that...when I'm lost on any subject, I like to say; "explain it like I'm a 5 year old." I use that to test folks that like to use big words when attempting to teach, explain or just conversate. If they can do that then, I'm more inclined to listen...

@wyattevans4791 3 года назад

😂

@tahachouache9349 3 года назад

😂😂😂😂

@Gregory-ud6zq 5 лет назад

I’m not even joking I watched over 5 videos and was more confused then when I started and then watched this video and everything is so clear now your a life saver

@claytrader 5 лет назад

Thanks for the feedback. Glad it could help.

@Gregory-ud6zq 5 лет назад

Responds to comments 2 years later what a god

@claytrader 5 лет назад

haha, I assure you, I'm quite human lol

@Greenmick6982 Месяц назад

Same. Almost ready to jump in. This is a great start.

@HyenaHouseENT 7 лет назад

Finall after sorting thru channels... I finally found a good teacher on youtube! Subbed :-D do keep up the great work & thanks for your clear breakdown of of info

@claytrader 7 лет назад

Thanks for the kind words. Glad you enjoy!

@ferdinanddandrade 4 года назад

agreed

@jahanarahelen4233 7 лет назад

Wonderful job. I feel like I am taking a real class! That's what I am looking for. Thanks Clay.

@claytrader 7 лет назад

Thank you. Glad you're finding it helpful.

@sarakeem.213 4 года назад

My dad is a teacher and that makes me respect teachers a lot for the great work they do.and you remind me of him you are a great teacher and plse I pray you enjoy doing it buddy. You are one of the best teachers out here on RU-vid first time I’ve seen your material and I’m really impressed with your methods. Thanks for the sacrifice you making. Always remember you are helping a lot of people who needs your help.

@claytrader 4 года назад

Thank you for the kind words.

@MAP07070 6 лет назад

Pouring gasoline on your money setting it on fire and "poof!" you have more money! Best metaphor fail of all time!

@claytrader 6 лет назад

:-)

@juana.7889 6 лет назад

LMAO

@kangenathan9703 6 лет назад

I honestly couldn't breath for a second there haha

@kreator-ys1yz 5 лет назад

Poof! $$$ gone , in which case , Now you would need a "loan"..

@WalterGerson 5 лет назад

Love the self-correction analogies as you teach the content. Very genuine and extremely helpful videos.

@claytrader 5 лет назад

Glad you enjoyed.

@ElementofWorship 4 года назад

I watched a different youtuber explain stocks with a notepad in front of me, and every time I was confused or needed to look something up, I wrote it down. Filled up a whole page and felt overwhelmed. I watched 6 of your videos with my pen and paper, and didn't write down any questions. I understand! This is so great, thank you very much. :)

@claytrader 4 года назад

Thanks for watching!

@sastindxa7 4 года назад

Holy smokes..! Youbarevthe best person with teaching abilities on youtube in my opinion. Thanks alot 👌👌

@claytrader 4 года назад

Cheers

@G2020- 2 года назад

Great video and a big warning to new investors to stay clear of margin accounts.

@claytrader 2 года назад

Absolutely!

@jcortega87 5 лет назад

Definitely cleared that up for me, thanks for the warning too!

@claytrader 5 лет назад

You're welcome.

@mferreira1231 4 года назад

Very, very well explained concepts! Crystal clear Clay! Thanks for sharing! cheers

@claytrader 4 года назад

Thanks for watching!

@NYCE_Fishing 6 лет назад

Great video Clay. I'm brand new to all of this. I have watched all of your Trade 101 videos. I want to learn and start the right way.

@claytrader 6 лет назад

First step is surrounding yourself with veteran traders, which you can do here claytrader.com/innercircle/

@MrBerry-nb1ez 6 лет назад

"Im a Trader now" LOL LOL Love your work man Thanks for all the vids!

@claytrader 6 лет назад

Cheers

@garyhite393 6 лет назад

Great info clay! like your style, no B.S. just the beginning for me and I really like all of the clarification that you provide within terminology. you are really helping my understanding of multiple scenario and I am a big fan.

@claytrader 6 лет назад

Thank you for the feedback. Glad you enjoy my style. When you are ready for all the knitty-gritty details of trading, head here claytrader.com/courses/

@ArmageddonAfterparty 7 лет назад

Not for me that. I'd rather go slow and lose only money that I own.

@claytrader 7 лет назад

I'd say that is very wise.

@darienturner123 4 года назад

You don’t own money. Subconscious the reason you trade

@larrysheran 4 года назад

@@claytrader Hey Clay big fan here. Had a question. So I inputted my information in TD Ameritade such as employment, Net Worth, etc.. and it converted my cash account to margin account. How can I revert back to a Cash account from a margin account with TD Ameritrade? Same as George I rather start slow with my own cash.

@claytrader 4 года назад

@@larrysheran I'd give TD Ameritrade a call.

@Joe.Devito1 3 года назад

instuctions not clear, i got MARGIN CALLED

@MTLJack 4 года назад

wow, best video i have watched in a while. Thank you

@claytrader 4 года назад

Glad you enjoyed it!

@04soccerfreak 7 лет назад

Please don't use the green marker. It is very hard to see on the whiteboard

@claytrader 7 лет назад

You're absolutely right. Yikes!

@Poker-is8dt 7 лет назад

Hey clay, nice video! I recently got a margin account with Scottrade 2:1. They said the interest is 7%, is that about the standard rate? Also I believe the guy I talked to on the phone said that as long as the position is opened and closed in the same day there is no interest on that money borrowed. Does that sound right? Thanks, I will be looking into your website

@dandagerman6604 7 лет назад

y0u better let that green marker scare you into respect!

@claytrader 7 лет назад

The margin rates are for overnight holds, so yes, that is accurate. 7% sounds pretty standard.

@soo-miyun6353 5 лет назад

haha

@nicoleluo6692 2 года назад

Thank you 👍 That’s also my principle, always respect the market and respect every penny of your money

@claytrader 2 года назад

Cheers

@TheJaWoman 5 лет назад

wow very good explanation! I finally understand...thanks

@claytrader 5 лет назад

Glad it could help!

@the_kotes 7 лет назад

Finally i get it. Thanks men!!!

@claytrader 7 лет назад

You're welcome. Glad it could help.

@bazerra854 4 года назад

Great video Clay 👍🏻👍🏻 I been learning a lot from you just by watching your RU-vid Videos. Proud Clay subscriber here 👆🏻

@claytrader 4 года назад

Awesome, thank you!

@yasmeenahmed7989 6 лет назад

I hate loans. I would stick to cash account as a beginner. Thanks for enlightening me, Clay!

@claytrader 6 лет назад

You're welcome.

@vamaidsociety1766 3 года назад

Ya kinda like a debit card. Use your margin as a cash account

@ryannewton5423 3 года назад

So I got a margain account but I Applyed As a cash One is that Good? I also got my tsfa as well. Reason why I got the margain account was to buy OTC.

@MultiChrisjb Год назад

how do you short a stock with a cash account?

@sdgirlCook Год назад

@@MultiChrisjb you cant

@brettlund1080 5 лет назад

Excellent video. Your descriptions are clear and concise!

@claytrader 5 лет назад

Glad you enjoyed and found it helpful.

@xilllllix 3 года назад

very helpful for newbies, thanks!

@claytrader 2 года назад

Glad it was helpful!

@garyzimmerman90 3 года назад

Excellent explanation of margins. No beating around just straight out forward.

@claytrader 3 года назад

Thanks for the feedback

@catherinegontran 4 года назад

Wow this was very well explained!!! Thank you for making this easy to understand! I also enjoyed your gasoline metaphor. Made sense to me lol

@claytrader 4 года назад

Glad it could help!

@leachristinstout1196 6 лет назад

thanks so much , you explain so clear , good job !!!

@claytrader 6 лет назад

Thanks. Glad it could help.

@BishopCityPresents 7 лет назад

Great video cleared alot up for me

@claytrader 7 лет назад

Happy to hear it could help.

@ajfitness4304 5 лет назад

Smart ! Thanks for keeping it 💯

@claytrader 5 лет назад

You're welcome.

@JollyCerealBowl 7 месяцев назад

This was awesome teaching; thank you Clay.

@claytrader 7 месяцев назад

And thank you for watching.

@ssoltani22 4 года назад

Love the way you explain!

@claytrader 4 года назад

Thanks for the feedback Saman.

@KASUN_M 4 года назад

Watched a bunch of your videos today. Thanks they are very helpful for me as a beginner.

@claytrader 4 года назад

Thank you for watching!

@Tennis-3582 5 лет назад

Why haven't I subscribed yet!! After all the information I'm getting from you I should definitely subscribe.

@claytrader 5 лет назад

I agree!

@fordexplorer5456 3 года назад

Clay you are the best when it comes to explaning compare to other (youtubers). keep up the good work! thank you so much

@claytrader 3 года назад

Thanks, will do!

@salehnasser1280 4 года назад

11 golden minutes in my trading journey. Thank you for making this video! And noted, I will impress the ladies by using this fancy lingo :-D

@claytrader 4 года назад

Cheers

@ricardoramos1491 3 года назад

timeless video thanks for the good explanation..

@claytrader 3 года назад

Glad it was helpful!

@woofwoofdoggo 5 лет назад

Thank you for the video!

@claytrader 5 лет назад

You're welcome.

@briandonnelly9862 4 года назад

Simply explained. Well done bruv.

@claytrader 4 года назад

Thanks for watching.

@tiarayong5377 3 года назад

Thanks for a great video, nice and clear😁

@claytrader 3 года назад

Glad it was helpful!

@zarasjourney6627 3 года назад

Thanks so much once again beautifully explained♡♡♡

@claytrader 3 года назад

Thanks for watching!

@theaveragecryptjoe1840 7 лет назад

Clay, First and foremost thank you for your educational videos. They have helped me tremendously in my trading strategies and my account balance has increased approximately 125% since I started about a month ago. I have been trading with a cash account, under the 25k mark and I'm curious how a margin account affects day trading. I'm currently subject to the pattern day trading rules and have been making one or two trades, every three days, once my funds clear. I've almost reached the 25k min and once I do, I know those rules won't apply to me anymore. However, there is still the 3 day turn around time to clear funds. Is this still an issue with a margin account? Thanks for any insight on this topic!

@claytrader 7 лет назад

This video explains: claytrader.com/videos/trading-academy-101-avoid-pattern-day-trader-rule/

@MrJerseysAddiction 5 лет назад

Great work here!

@claytrader 5 лет назад

Thanks.

@mrfordsclass 3 года назад

That was an outstanding explanation.

@claytrader 3 года назад

Thanks

@coughforme21 7 лет назад

Another useful video. Thanks.

@claytrader 7 лет назад

You're welcome.

@SeanMatthewWhitfield 3 года назад

Thanks for the information.

@claytrader 3 года назад

Any time!

@danielsugano5801 4 года назад

Clear and honest presentation. Thanks.

@claytrader 4 года назад

Thanks for watching.

@edvardschock9739 4 года назад

great info. Thanks

@claytrader 4 года назад

You're welcome Edvard. Thanks for feedback.

@cfrtravel7734 4 года назад

Thank You!! Always wondered what that "margin" thing was on my Schwab account - Nice to know I have that "leverage" :-)

@claytrader 4 года назад

Happy to help!

@AB-C2 3 года назад

Wel explained, especially the interest part ..... Thanks again.

@claytrader 3 года назад

Glad you liked it!

@rogeliotrego9719 6 лет назад

great videos! question, would I be able to get a margin account and make a long term investment like snp, I know you explained or said it with the interest example but idk if index funds count also

@claytrader 6 лет назад

Investing on margin is a very risky thing.

@Meganwithoutaplan 4 года назад

You explain things in your videos as if your viewer was a 6 year old.... THANK YOU! I need things explained that way. You are the BEST Stock teacher, i'm SO HAPPY I found your page.

@claytrader 4 года назад

I'm about as smart as a 6 year old, so yeah, that's how I need to explain it so I understand lol

@Meganwithoutaplan 4 года назад

@@claytrader haha, Well same... and thank you for that!

@tsupeteromrb1641 3 года назад

thanks man....nice lecture

@claytrader 3 года назад

Glad you liked it

@malekai777 3 месяца назад

this exactly what i was looking for

@claytrader 3 месяца назад

Great!

@orcoastlinelandscaping4919 2 года назад

Great Explanation!

@claytrader 2 года назад

Thanks!

@Funboyy123 3 года назад

The fire analogy was hilarious, the seed one was great tho xD

@claytrader 3 года назад

Thanks

@naravjitdhimann1730 3 года назад

great vedio, thanks for that

@claytrader 3 года назад

You're welcome

@christophermcdaniel9708 Год назад

Great explanation, simplified

@claytrader Год назад

Happy to help!

@precious_orim 2 года назад

I love your channel ♥️♥️

@claytrader 2 года назад

Thanks!

@kidk0be 3 года назад

Great explanation. Thank you

@claytrader 3 года назад

Glad it was helpful!

@novotny9832 7 лет назад

how about shorting with cash account? Is it true one can only short sell using margin acc?

@claytrader 7 лет назад

That is true. You must have a margin account.

@muskastanikzai1708 2 года назад

thanks for the info

@claytrader 2 года назад

No problem!

@abduljlilalzoheri 4 года назад

good tool but there is risk of losing money and have debt you are an honest man and i respect that using trading simulator batter at the beging

@claytrader 4 года назад

yes, you need to be careful for sure

@vedaste19 5 лет назад

Hey Clay, thank you for your videos, I am learning so much. I have bunch of questions tho... but let me ask you one for now. How do you go about trading on USA stock market when you live, let’s say Africa ?

@claytrader 5 лет назад

You would need a broker that gives you access to USA markets. Interactive Brokers is the company I'd start with.

@sivaprasad6739 7 лет назад

Hai Sir I am from India. i am blessed to watch Your Classes and easy to understandable

@claytrader 7 лет назад

Thank you for the feedback. Glad they are helpful!

@kandisyoung9776 7 лет назад

Thank you for these videos. They are really breaking things down for me... Could the margin account be a way to get around the PDT law? For instance, if I had a margin account with 4:1 ratio, and i had $6250, my buying power would be $25,000. Does that now allow me to be a pattern day trader?

@claytrader 7 лет назад

No. The PDT exists and directly pertains to margin accounts.

@ashikiqbal376 6 лет назад

Nice video! Thanks.

@claytrader 6 лет назад

You're welcome.

@flashyflash1164 4 года назад

Great explanation . Looking to upgrade my account still on the fence though

@claytrader 4 года назад

Glad I could help

@spatilemapu1260 3 года назад

Awesome man

@claytrader 3 года назад

Thanks!

@bufferzone7088 3 года назад

Thanks Clay!

@claytrader 3 года назад

You're welcome!

@daifuruta581 4 года назад

thank you for lesson.

@claytrader 4 года назад

Thanks for watching

@samwadi1 6 лет назад

I really enjoy and appreciate all your videos, im looking into studying trading, but im not sure what my options are or where i should start, as i live in the uk, im not sure if the rules of trading are different. Would be nice if you have a video about this topic. Thank you.

@claytrader 6 лет назад

Great question Sam. Everything I teach in my training courses - claytrader.com/courses/ is applicable to any country in the world. Why? Because I teach "charts" and once you properly understand how to use a chart, you have the ultimate flexibility as I explain here - claytrader.com/videos/want-flexibility-learn-how-to-trade-with-charts/

@stevencuevas6939 6 лет назад

Finally found a good teacher

@claytrader 6 лет назад

Thanks! Glad you enjoy.

@tehbui604 3 года назад

hello clay, thanks for the video. i subbed! im with RBC and it shows my margin rates are 4.5%. is that charged per month? or per year? also, say i sell a stock, does that money pay into the margin first before it goes into my cash account? Thanks again!!

@claytrader 3 года назад

I never use margin like that, so I'm not sure. It'd be best to talk to your broker first hand to fully understand their policy.

@lynnmell1586 5 лет назад

So my brokerage account is different from my margin account? If I'm not mistaken I can only short on margin account right?

@claytrader 5 лет назад

No. They are the same. You can just choose whether or not your brokerage account is a margin account or not.

@santiagomoreno6513 4 года назад

Clay if I open a margin account do I need to ask for a loan in all of my trades or whenever I want to?

@claytrader 4 года назад

You don't need to ask. It's automatic.

@paqanini 3 года назад

Hello, thank you very much for the simple explanation. I have shifted my account from cash to margin, however I did this only to be able to trade pink sheets (ibkr requires account type to be margin for that). Bow I see all that SMA, MntMgn balances. My question may be stupid, but better if I ask and look like the one instead of finding out later. I don't want to spend any of these balances and still want to spend within my cash limit, how much I have deposited. That simply means I won't be charged for any interest, as I simply don't use it right? And there is no obligation, that I have to use it, right? Is there usually some penalty for having margin account, but not spending margin balance?

@claytrader 3 года назад

Correct

@umeshjoshi57 4 года назад

You are a good teacher.

@claytrader 4 года назад

Thanks!

@phoneixashes 6 лет назад

Can you please tell me the associated formulas with margin accounts, and margin transactions/purchase, such as rate of return? Thank you,

@claytrader 6 лет назад

Maybe I can do a video someday. Thanks for suggestion.

@ryeproductions6473 6 лет назад

this was great information. how easy is it to change from a margin account to the cash account?? thanks.

@claytrader 6 лет назад

Should be just a single phone call or maybe a few clicks of your mouse. Depends on the broker.

@keekvideoo 6 лет назад

very well explained

@claytrader 6 лет назад

Glad to hear it could help.

@bretwillcocks4739 4 года назад

Hi Clay. I've been slowly watching your videos and paying close attention. I'm at the stage where I'm going to start paper trading. Therefore looking at what type of account to set up. If I start with a Cash Account. As I progress, can I change it to a Margin Account? Or With a Margin Account, can you still use it like a Cash Account and not borrow from your broker? Regards, Bret

@claytrader 4 года назад

if you're interested in "talking stocks/trading in general", that's the entire idea behind my private trading community (which you are welcomed to join) which you can find here claytrader.com/team/

@play4dayzproductions347 2 года назад

Yo clay, question.. When you switch between shorting and going long, are you switching accounts each time?? Do I need two separate accounts, with separate funds?? And also, do you need to buy Data for both accounts if that is the case? Hope you see this, first time trading today with two hours to go to open! Thanks!

@claytrader 2 года назад

No, same account for everything.

@supperawesomemomboss4477 Год назад

“Nope - don’t wanna use pink” 😂💕 Love these videos ! It makes sense!!!

@claytrader Год назад

Cheers!

@zyppoo3 4 года назад

Great vid. The interest is only payable when you use the loan. I.e not just for opening the account and having the unused margin there. Correct? Ty

@claytrader 4 года назад

correct

@freshbreezecleaning6761 6 лет назад

when you day trading and close your first position on a margin account and try take another position those the second position consider as loan? i am just using my cash fund .

@claytrader 6 лет назад

That depends on how much your first position uses of your cash on hand. Anything above that would be considered a loan.

@sonorla6246 4 года назад

Amazing video. Thank you so much clay! I'll definitely spread your name around for new subs and for people interested into getting into the trading game. Your content is quality in every sense of the word

@claytrader 4 года назад

I appreciate the kind words and thank you for being willing to share the video!

@Eddy.user-pq5fg2bf7s Год назад

Your the best teacher

@claytrader Год назад

Happy to help!

@cleverrea3760 7 лет назад

After watching a few videos I just realize your logo it says "no emotions, just facts " hahaha but you broke your rule, you said you don't want pink 😂😂😂😂 very helpful videos, my friends and I decided to play this game and see who gets more money in a year from now and I was lost. I had no idea of what the game was about, till now. Thanks

@claytrader 7 лет назад

You are welcome :-)

@Crazywaffle5150 5 лет назад

Can you still collect dividends on a margin account? Or does a broker get a percentage of said dividends?

@claytrader 5 лет назад

All the details on that kind of stuff here claytrader.com/courses/grow-rich/

@tonymontez6628 4 года назад

Can you use the money to buy a stock and then deposit cash? Or is the loan final? Also, is Cash alternatives the amount they will loan you in TD Ameritrade? And I assume it is only a loan if you exceed the available cash deposited. Thank you

@claytrader 4 года назад

All brokers have different margin policies. You'd want to ask them directly.

@michaellin3528 4 года назад

Hey Clay, if I have a margin account and I buy shares so that my cash balance can cover it, will my broker still loan me a percentage of the transaction automatically? I just want to make sure that I don't risk getting a margin call if I trade just with the cash that I have. Thank you for your time and keep it up Clay!

@claytrader 4 года назад

No, you'd just be using cash.

@humargonzalez1702 6 лет назад

Do you have to use that leverage or is it there as an option.

@claytrader 6 лет назад

You don't have to.

@Michael-qy1jz 5 лет назад

Do you have a video showing how you physically short a stock online in your account after you open a margin account??

@claytrader 5 лет назад

Yes, in many of these live trade videos, I short stock claytrader.com/blogs/live-trade/

@geraldb2541 4 года назад

I have a question? If you open a margin account, do you close the account after you're done making your profits or do you just now have a separate account from your cash account? Also, does the money get scaled back down at the end?

@claytrader 4 года назад

All broker's are slightly different.