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Re: Margin Lending

Depends on your trading style. If you have low capital or are only trading short term on the largest companies* then CFDs are the way to go

If you hold a portfolio of stocks for more than a couple of weeks I don't think you can beat a margin loan because, you only pay interest on the amount you owe and the interest drops as your position grows unless you borrow more funds. We have had a few pretty good years but if next year is flat then an effective extra interest of 3% on the total position size which translates to 9% against your capital could be a very large bite from your returns.

* This is if you aren't using DMA .I have been doing some short term stuff in CMC with LNN and ORG and the spread can get up to 7 cents and these aren't exactly small companies. This is an effective additional brokerage of 70 dollars for a $7k position. I noticed the problem more with fills and estimate that I would have returned 20% more if I had used margin or DMA. I've just joined Macquarie and am waiting for my password to start trading with them.

MIT

<blockquote data-quote="mit" data-source="post: 25947" data-attributes="member: 1435">Re: Margin LendingDepends on your trading style. If you have low capital or are only trading short term on the largest companies* then CFDs are the way to go If you hold a portfolio of stocks for more than a couple of weeks I don&#039;t think you can beat a margin loan because, you only pay interest on the amount you owe and the interest drops as your position grows unless you borrow more funds. We have had a few pretty good years but if next year is flat then an effective extra interest of 3% on the total position size which translates&nbsp; to 9% against your capital could be a very large bite from your returns.* This is if you aren&#039;t using DMA .I have been doing some short term stuff in CMC with LNN and ORG and the spread can get up to 7 cents and these aren&#039;t exactly small companies. This is an effective additional brokerage of 70 dollars for a $7k position. I noticed the problem more with fills and estimate that I would have returned 20% more if I had used margin or DMA. I&#039;ve just joined Macquarie and am waiting for my password to start trading with them.MIT</blockquote>

[QUOTE="mit, post: 25947, member: 1435"] [b]Re: Margin Lending[/b] Depends on your trading style. If you have low capital or are only trading short term on the largest companies* then CFDs are the way to go If you hold a portfolio of stocks for more than a couple of weeks I don't think you can beat a margin loan because, you only pay interest on the amount you owe and the interest drops as your position grows unless you borrow more funds. We have had a few pretty good years but if next year is flat then an effective extra interest of 3% on the total position size which translates to 9% against your capital could be a very large bite from your returns. * This is if you aren't using DMA .I have been doing some short term stuff in CMC with LNN and ORG and the spread can get up to 7 cents and these aren't exactly small companies. This is an effective additional brokerage of 70 dollars for a $7k position. I noticed the problem more with fills and estimate that I would have returned 20% more if I had used margin or DMA. I've just joined Macquarie and am waiting for my password to start trading with them. MIT [/QUOTE]

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