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| About the WallstreetE MARGIN ACCOUNT |
| A margin account allows you to use
your securities as collateral for the purchase of more securities
or even for a personal loan (using personal checks). You can use a
marginal account to increase earning potential in a bull market or
as a short term loan in a bear market. Although you do pay margin
interest for this privilege, it is lower than many major credit cards. |
| Frequently Asked Questions on Margin |
| Why have
a Margin Account?
What is the difference between a margin and a cash account? What is an example of a Margin Account? |
| Why have a Margin Account? |
Borrowing on margin allows you to extend
your WallstereetE account, using your securities as collateral
for this loan. With this loan you can:
|
| What is the difference between a margin and cash account? |
| With a margin account, you do not need
one hundred percent of the purchase price deposited in your account
in order to purchase a stock. Stock that you already own can be used
a collateral to purchase additional stock or even for a personal loan.
In a cash account you can only purchase securities with cash from
your account Back |
| What is an example of a margin account? |
| For example lets say you bought one hundred
shares of xyz stock for $5,000 in a cash account. In a margin account
you could buy another $5,000 of xyz stock giving you a grand total
of $10,000 of xyx stock ($5,000 on margin) even if you only have $5,000
in your account.
Suppose that you had 5,000 to invest and picked a stock selling for $50 that you thought was going up. Under a 50% margin rule you can buy 200 shares of the stock as opposed to just 100 shared, with your $5,000 *. If the stock goes up five points, you make $1,000 instead of $500. If the stock goes down you would receive a margin call. * This does not include any taxes, commissions,
or margin interest which may be due. |
| What will it cost me? |
| Margin Lending Rates
vary based on the current Federal Reserve Broker Call Rate. Rates
also vary depending on the size and the volume of the account. Please
consult us for current rates and further details. E-mail:newaccounts@wallstreete.com Toll Free: 1-888-WALL-STE (1-888-925-5783) Telephone: (888)-925-5783 or (305)-266-9120 Fax: (305)661-7402 Back |
| Is there risk and is it worth it? |
| As with any borrowing there is always
risk. If the securities which are held as collateral fall in price
below certain percentage you will receive a margin call. This means
you must make a deposit to increase your collateral. Always use conservative
estimates when investing in margin securities and always take into
account possible market fluctuations.
The interest rate is often comparable
to, if not lower than, the prime interest rate -- the rate offered
by banks to their best business customers. Gains in your securities
can pay this interest. |
| How do I open a margin account? |
| First, request a new
account application and make sure you specify that you
want the ability to trade on margin or contact
us. Back |
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