DO NOT TRADE ON MARGIN

[akis]

Ok let me tell you what happen to me. I lost my job in 1993 in 2005 I decided to trade Canadian banks stocks only RY, TD and BNS which I was doing very well, I took a line of credit on my paid in full house of 180,000.00 I bought TD Bank on margin 7,800 shares at 63.37 average prices that was in Nov. 2008 since then the stock started to lose ground so when it reach 39.37 I could not hold my position  any longer I had to sell that’s how I lost $200,000.00 I wish I have never traded on margin. YES I KNOW I WILL NEVER SEE THIS MONEY AGAIN. 

[aaron28]

Trading on margin can be extremely dangerous - the lesson you have learned is something many of us have learned already. It is common for people to trade on margin. I would say this - if you are trading, make sure you do your homework and that you do not need that money. You might not ever see it again.

[stocksavycanuck]

Why you would margin on your house and risk it all in one stock is way beond me. You need to do your research and diversify alot more than that. A margin account is a very usefull tool but you must realize tha it is borrowed money and there is interest so make sure your very confident in your pics and they are going to generate a profit after realizing your interest. I have a margin account i own dividend paying stocks which are solid and covering my interset plus good profits. The benefit with the margin being the ability to purchace more volume of good stocks and for me generat alot more dividend income.NEVER THROW IT ALL INTO ONE STOCK

[garilou]

Akis!
I am really terribly sorry for you! You were probably driven by the stress of having lost you job and tempted by those hundred of adds that promise to make you rich almost instantly!
I write this, although I am pretty sure that you will never read it.

There is margin and margin!
And there is trading and investing!
What usually is considered as margin is what you can borrow on the stocks that you hold in an account.
Taking a credit line on one's house is NOT trading on margin!
And holding stocks form 2005 till 2010 is NOT trading.
Even if the prices of the houses in the US were going down, you were one of the few who did not risk to loose your house when the bubble exploded.

That being said, there are lots of examples of supposedly well educated investors and economists who have done, at another scale, much worst!
I am not only talking about the US stimulus plans, but also China who created plenty of liquidity in the past years, and used it to speculate on commodities.
Now China, with it's worst drought in 60 years, is caught with a terrible inflation in food mainly, but not only, and will have to raise interests rates which is going to hurt it's production a lot, a probably slow down it's admired productivity.
Too much confidence and greed blinds judgment!
Except that in China, the money is certainly not lost for every one 

Back to trading and margin.

There are moments (certainly not now!) where trading on margin can be very profitable, but I agree that one must be very prudent. I guess one can do it for a short period, when the stocks already owned are still very promising, and one wants to acquire another one, but pretty soon, one should decide which one to sell to cover the margin.
 
In 2005, even if you had not been trading on a credit on your home, the Canadian banks were doing pretty well.
Holding stocks, and especially all in the same sector, for many years, shows that you were:
1. not trading, but trying to invest.
2. that you did not have the "know how" to take such risks!
If you had no job, you had the time to check, and most of all, read and learn!

What mystify me is how come you did not take you profit, or cut you losses earlier!
By mid July 2007, there were already big warning signs, but in mid 2008, you still had a good gain on TD, and probably on the other ones too!

Maybe you were misled, just hearing that the Canadian "big 5" were doing better then the American banks!
But the big Canadian banks had lots of "interests" in the US, and when everything crashed, the Canadian banks were just pulled with the rest of the crash..
Apart from the big mistake of coming into the markets with money borrowed on your house, you made the mistake of not "listening" to the fire alarms!
And maybe listening too much on the so-called "analysts".
The more frequent the "upgrades" or good new accumulate, the more you must think "something is probably going wrong", and the big funds, that all owned those banks were begging you not to sell!
The banks are usually the first warnings of a coming crash, and also the last to come out it.

Now that you've lost so much, I guess you think that it's over for you.
I hope you found a job since then, and most of all, that you will wait to "play" in the markets only when you have enough money were you can say: "I can loose it all (what should never happen), and still live my life and sleep at night!"
Louise
 

[sharetipsinfo]

Hi,

we felt bad that you lost your amount you had on margin.This is why we shouldn't go for such trading as the biggest drawback of the margin buying is of course the time frame in which you have to close the deal what happened with you.Often times it is seen that the stock do not get enough time to appreciate or it does not get time for corrections after the price had fallen for some reason within that day.So it is evident that margin buying risk is greater than delivery based trading where you are getting unlimited time at least.So try to avoid it.

Happy Trading!!
Regards,
ShareTipsInfo