DAYTRADING Fundamentals Message Board

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Strategies & Market Trends : DAYTRADING Fundamentals

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To: Eric P who started this subject	10/7/2000 8:32:34 PM
From: Jeff Sutton	Read Replies (2) of 18137

question about margin in daytrading account ... forgive the ignorance of this question, but I'm confused. I often go on margin for intraday trades, but try to stay off margin overnight. Here's my question. Since, as I understand it, you make more off a profitable margin trade, and also lose more ... someone tell me why the following strategy would not work. Suppose you had some kind of market neutral position in a fully margined account (long stock, long puts, perhaps). At some point in the day, one half of the trade will be profitable. If you close that half out while you are fully margined, you will make more than if you made the same trade without margin, right? Then suppose you immediately closed the losing half of the trade in your now non-margined holdings. Even if the trades balanced each other out, wouldn't the profitable sale while you were margined outweigh the loss while you were not margined? Sorry if this is confusing ... this may qualify as a very stupid question ... does anyone understand my point? Thanks!

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