Margin Trading

On previous post, we had introduce for normal trading. In this post we will touch on Margin Trading.

Margin Trading is a trading that can gain / lost money without keeping the share and not using your capital money. The profit / lost made through the difference (margin) of buying and selling the share within the payment due period (Normally is T +3).

For all trading, we need to pay to the Broker Company on T+3days. If you buy and sell the share within this date, you does not need to pay to the Broker Company on the share you buy; instead you will gain / lost the difference of the trading.

Example:
Case 1
Monday - buy 1000 units of ABC in RM 1.00
Tuesday - sell 1000 units of ABC in RM 1.10

The difference is RM 0.10 x 1000 units = RM 100
The Broker Company will bank in RM 100 - all broker fee to you by next Monday (T+3 from Tuesday).

Case 2
Monday - buy 1000 units of ABC in RM 1.00
Tuesday - sell 1000 units of ABC in RM 0.90

The difference is RM 0.10 x 1000 units = RM 100
You need to bank in / pay to the Broker Company RM 100 + all broker fee by next Monday (T+3 from Tuesday).

Some Broker Company offer more margin day up to T+5; this is depends on the offer the company give to you. But common is T+3.

Intra Day Trading is to trade your share within the same day. Most of the Broker Company will give you an offer of lower Broker Fee such as 0.2% per trade. The profit is made on the difference (Margin) as well.

This kind of trading is to make money with no capital, but the risk is high. This is totally a very short term investment.

Technical Data Analysis is a very important analysis tools in this case. We will discuss on Tech Data Analysis in later part.