Alterintive to Margin calls.
If you want to play the NDX leverage 2x and not worry
about a margin call buy into UOPIX , or you can short
it via USPIX, also 2x.
While these funds can move fast (2X) and set you under water
if you don't use margin to buy them you will not get
sold out.
I have bought the USPIX on margin, but only because I
was fully invested at the time of order, however I've
always sold enough to come off margin by the end of the
Day.
I have been fully invested in the UOPIX and decide
I want out , and may use margin to short the QQQ
on what I think is the high of the day, but however
my sale of the USPIX at days end also ends my margin.
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I may use margin to rotate from one sector to another
but my style is to not take margin to bed with
me. I've been using it since 1996 and have never
had a call and only once did I stay on margin over
two days even then it was only about 20%
I look at margin like a dinner date, but one
you shouldn't get married to.
It can be very handy at times and let me make a trade
I couldn't make without it , ( like I may want to
buy some covered calls back to dump a stock but I'm
out of cash ) Or I may want to buy more stock than I have
cash but know if I sell some calls it will bring me
back off margin.
The short of it is use margin like a tool , but not
to leverage with, if I must leverage I can use options
I might buy them on margin, but I will not
actually leverage on margin as I will sell something
to get off.
With one exception..Lets say I'm sending in
a deposit and I know it will take a day or two
to get there I may buy on margin while it's in
the mail knowing it will cover anything I buy
when it does.
I have received a maintenance call in the mail a time or
two, but it was covered even before I received
them.
To leverage on margin enough to risk a forced sale is
a No No. Just don't do it , as a few good wins
like that will just set you up to get cleaned out
latter.
Jim |
