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Gold/Mining/Energy : Daytrading Canadian stocks in Realtime -- Ignore unavailable to you. Want to Upgrade?

To: Bid daddy who wrote (27478)	12/17/1999 1:00:00 PM
From: bigbuk	Read Replies (1) \| Respond to of 62348

was it just on COR? or others as well? i am holdong all CORL shorts for now. BB

To: Bid daddy who wrote (27478)	12/17/1999 1:44:00 PM
From: Cameron	Read Replies (1) \| Respond to of 62348

Re. bid.com..... they dropped the margin limit to 0% instantaneously and immediately began making margin calls. There was no notice given. All lot of people did a burn and crash as a result. As a survivor of the experience, I learned a lot. Fortunately, while I had over extended, I hadn't gone totally nuts so was able to cover and sell after the stock rebounded a bit. In a lot of ways, TD did me a favour and I learned a valuable lesson at the same time. So.... the following is based on some hard lessons I've learned along the way and while I really do sympathize with your situation (without knowing the details), it is important you get beyond it and work out a plan. They set their loan values based on their professional evaluation of the risk associated with any company. They are almost without exception, more liberal with their loan limits than other brokerages however. This is both a plus and a minus, depending on your personal situation. Personally, I like it because I want the control... but it is also dangerous. With the bid.com debacle, TD had to react very quickly. Investorline didn't because their loan limit on bid.com was already 1/2 of what TWE's had been. I was trading through both at the time and know this from personal experience. In any event, a large part of the risk assessment is based on volatility. Basically, when they reduce a limit, it is because of increased volatility. They are only trying to protect value for their shareholders. When they let you margin, the shares are their security. If somebody margined when COR was $64, TWE's security isn't very good right now. If COR drops to $25 their security isn't worth very much at all if someone was fully margined. They only have 2 choice... gamble and hope the prices go up or reduce the loan values and start making calls... and they're certainly not in the gambling business. The reason they got to the big guys first is because that is where their risk lies.... who are they going to phone first.... someone who bought 10,000 shares on margin or someone who bought 500 shares on margin. So... stuff like that happens and it is a valuable although painful lesson!! Now, having said that, and without knowing the details of your situation, they can be very reasonable... it isn't usually an "all or none cover it immediately situation". If you're in a bind, figure out how you're going to work yourself out of it. Prepare a plan and present it to them... it has to be more than "if the price goes up I'll sell" ... however... something more like "I'm meeting with my bank manager tomorrow to establish a facility to cover the margin shortage, which I will pay off in regular monthly payments"... or "I need a couple days to collect some cash from a client/relative", etc. They should be willing to give you a day or two to get it all together. When I told them I'd cover the shortage on bid.com they were (a) very and pleasantly surprised and (b) very professional about the whole matter - took the pressure off right away. They had just spent the whole morning talking to people who were crying on the phone and who knows what. From their point of view, imagine having to phone hundreds of people up on margin calls.... not a fun job!! So... you basically have to decide what you want to do. I will say you should take TD's warning seriously... it could actually save you from getting in much deeper. If you don't want to liquidate all or part of your portfolio then you have to seriously consider how much you are really prepared to risk... but make sure you don't underestimate that risk. COR could be at $6.00 again tomorrow for a number of reasons.... and you could owe the full margin amount with little to recover from selling COR at the reduced price. If you make alternative plans which buy you a day or two, you may be able to get out on your own depending on what the price does... which would be very lucky. What ever you do though, don't tell them you'll cover and then don't... they'll sell you shares before they get off the phone and at whatever the price is at that moment. On the lawyer route, a lot of people talked about it with the bid.com thing on that thread. Nothing ever came of it and the only people who benefitted were the lawyers. They cover themselves pretty well with the margin agreements. In any event, good luck. If it makes you feel any better you're not the first ones to go through this. The key thing is to learn from it..... although that is always easier a few days/weeks after the whole thing is settled. Good luck, whichever way you go. Anyhow, I'm sure this doesn't make you feel any better.... but try and work with Greenline... they're usually pretty reasonable.