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Show ALL Forums  > Off Topic  > How long have I got to respond to a Margin Call?      Home login  
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 Palifornia562
Joined: 6/17/2009
Msg: 1
How long have I got to respond to a Margin Call?Page 1 of 1    
If I get a margin call to invest more funds, how long am I given to do that? I bought some stock on a margin, and I got a notice that says "You have a margin call of $4,804.00. To avoid liquidation violations, Fed calls must be satisfied with a deposit of stock and/or funds." I use Scottrade if that matters
 prezmic
Joined: 6/17/2008
Msg: 2
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How long have I got to respond to a Margin Call?
Posted: 2/24/2010 11:04:19 AM
I think by the close of the next business day. They have the right to liquidate funds to meet the margin, but depending on your broker - you might have a little more time.

I would assume you have 1 day and cover it.
 luckyhot777s
Joined: 12/26/2008
Msg: 3
How long have I got to respond to a Margin Call?
Posted: 2/24/2010 1:27:22 PM
If your with Scottrade, don't they have all the information you need to determine this?

Personally I have no idea.
 WalksOnWater2
Joined: 5/19/2009
Msg: 4
How long have I got to respond to a Margin Call?
Posted: 2/24/2010 1:33:50 PM
You have to deposit more money to your account so you are above the maintenance margin. Read your account agreement to see what that is. You have to do that immediately, and many times the broker doesn't even have to notify you, they can just proceed to liquidation.
Read your agreement for the terms. It should be clearly stated.


 justbunky
Joined: 4/3/2009
Msg: 5
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How long have I got to respond to a Margin Call?
Posted: 2/24/2010 1:36:22 PM
Ask your brokerage firm, not us! It should be easy to search their site.
 Super Ryan
Joined: 9/15/2007
Msg: 6
How long have I got to respond to a Margin Call?
Posted: 2/25/2010 2:18:39 AM
You must pay it immediately. And you are also at risk of having your trading status suspended. This is very serious, if you suffer losses you can't pay, you can face criminal charges.
Buying on margin can seem attractive for the chance of greater returns, but it also greatly increases your risk. And unlike straight buying, buying on margin can cause a greater loss then the money invested.
Please for your own benefit sell all your stocks that were purchased on margin. You can lose everything in the world you own.
And it is your responsibilty to make sure your margin is met. Scottrade can liquidate without informing you, and not only do you lose your original investment, you can also be on the hook for further losses.

Here is Scootrade's page on margin calls:
http://research.scottrade.com/public/knowledgecenter/education/article.asp?docId=9c0e7fe51b8a4a85bcd7659536b1c5b1

You had a deleted thread asking for advice on becoming a day trader. I recommended you take a course on investing and play the virtual stockmarket for a year. I don't know if you saw the advice, but you deffinitely did not follow it.
Making risky investments is very simular to goingto Vegas with every penny you own, sitting down at a poker player with 8 of the hardest sharks in the world and not knowing if flush beats a straight.

The only people who should be buying on margin are those who can suffer twice the losses.
 Lint Spotter
Joined: 8/27/2009
Msg: 7
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How long have I got to respond to a Margin Call?
Posted: 2/25/2010 5:57:37 AM
Are you seriously trading with funds that you don't have in your trading account?

Sounds like you're losing a lot of money in your little venture...
 justbunky
Joined: 4/3/2009
Msg: 8
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How long have I got to respond to a Margin Call?
Posted: 2/25/2010 11:28:22 AM
Whoa, SuperRyan, you make good points but you're a little alarmist! Sell all stocks bought on margin?? How about paying off (or down) the margin balance, instead of doing a fire sale, and buying or selling stocks on their merits?
 Super Ryan
Joined: 9/15/2007
Msg: 9
How long have I got to respond to a Margin Call?
Posted: 2/25/2010 12:38:47 PM

Whoa, SuperRyan, you make good points but you're a little alarmist! Sell all stocks bought on margin?? How about paying off (or down) the margin balance, instead of doing a fire sale, and buying or selling stocks on their merits?

My advice was specifically to the OP, because I don't think he understands the risk properly. He could hold onto the amount of stocks he can own outright.

For those who don't know. Buying on margin is basically taking out a loan to buy more stocks then you are willing to pay for. The investor pays a reserve, and the dealer holds the stocks as collateral. If the stock drops to zero, not only do you lose your original investment you also must pay for all of the stocks loss in value. This means you can lose much more than the original investment. Since it is a loan there are also interest and other fees the investor must pay to the dealer.
My advice was not to firesale everything, just get rid of the securities that hold too high of a risk.

I don't even recommend buying on margin to the savy investor, unless they have some sort of lock (they don't really exist). But someone who is a rookie to the stock market should never buy on margin. Alex P. Keaton taught me that.

And let's not forget, the stock market puts heavy favouritism to the big guys, and the little guys have a much harder time seeing a return. Way too mny people treat the stock market as a casino, but fail to recognize the heavy risks of certain investments.

I will say it again. If you want to be a day trader, play the virtual market for a year before you start playing with real cash. Most large firms won't let you trade until after you work for them for 10 years, and that's after getting a bachelors of commerce and getting licensed. And most of them still do worse then most ETFs.
 NothingLeftToBurn
Joined: 6/11/2007
Msg: 10
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How long have I got to respond to a Margin Call?
Posted: 2/25/2010 12:42:14 PM
This thread reminded me that I owe the bank a couple of hundred for overdrafting my account
 sweetness-one
Joined: 10/17/2005
Msg: 11
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How long have I got to respond to a Margin Call?
Posted: 2/25/2010 3:00:35 PM
OP, seriously, after many threads now...haven't you realized, there ARE no "get rich quick" schemes that work a large proportion of the time, otherwise everyone would be doing it??

Listen to SuperRyan. I play the stocks too, but with money currently in my account. The way you are doing it, Ryan is correct....you're gambling with money you don't have, and the odds aren't in your favour, you're more likely to lose your azz if you can't cover the funds.

He is also correct, that you need to respond immediately. If you don't have the funds to play properly, though, then I'd avoid the high-yield high-risk wildcat investments, and stick to a safer (smaller) return.
 leanco
Joined: 12/7/2006
Msg: 12
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How long have I got to respond to a Margin Call?
Posted: 2/28/2010 11:10:19 AM

I don't even recommend buying on margin to the savy investor


Oh come on, see it for what it is. Margin is a leveraging tool and as with any leverage, it cuts both ways. The key is to understand and manage the risks so as not to get over-extended. That's what a savvy investor would/should do.

It does sound like the OP doesn't quite know what he's doing. If true I would hope that once he has his margin call settled, he starts reading up on investment big time before making another trade. E-trade has made trading easy and low cost over the internet, but it has also eliminated the human stock broker who traditionally helps the neophyte when he runs into trouble. The best advice I can give is: do your homework.
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