My advice is don't use it, it is a highly risky game, only use when or know prefectly what are you doing.

Share margin only good when bull time, at bad time, you double the losses. Imagine you do share margin account, your holding of shares value become lesser, while still need to pay up the bank on interest. Also when share price goes down, you will be facing margin call to top up.

ok, that's different as said know what you are doing. If just for the sake to 'double up' without cash backing in near term, 90% will result in some unwanted circumstances. I have seen a lot of individual using margin account to 'double or triple up', eventually most (8/10) resulted in bigger losses.

Share margin is good for syndicate to use short term cash for their 'goreng' purposes but doesn't mean surely gain also for them, there are plenty of 'fail goreng' too.

Why you really need to use the share margin to buy right now, can't wait another 2 months? share might be cheaper then or can be more expensive.

This post has been edited by cherroy: Jan 17 2008, 02:31 PM

Ok fair enough.

But what if it drops another 10%, average again using margin? then it drop further another 10% doing triple margin on it?

He disposed already, if not mistaken.

Another point to make, it is always advisable (don't mean it is a must) share margin or leverage play when shares are really damm cheap and trade at insane cheap level. In between, If you can get right everytime, then share margin will make you rich, but if not, better becareful.

Just like I posted the sceario, it drop from 5 to 4.50, you do share margin, then market continue to drop, then it become 4.00, margin again? then become 3.50, another margin? at that time, you pay triple interest charges, only when shares rebound back quickly to 4.50-5 then you are making a gain. But if shares price stay and stagnant at that level, then you are paying 3x interest to banks. So if shares only rebound to 5.00 after 2-3 years, you gain nothing as interest can 'eat up' your gain.
But to be fair, on the other hand, if shares do rebound and shoot higher to 6-7, then you earn 3x profit.

Just my 2 cents, judge your own.

It depends, as far as I knows, it can be varied depends on banks and individual credit creditibility.

Yes, most margin users are losing money rather than making one. You only use margin when in bull run, in other time, you are almost surely lose out as you have 1/3 of chance of winning.

Market up - gain
Market stagnant - loss out on interest charges
Market down - loss out on interest charges + capital.

Yes, this is what we call carry trade.

This is always a risky move. Only do if you afford and dare to take the risk and fully aware the consequences.
Lot of people burnt more than people gain through this way, because of greed and timing. Main reason, people only want to do margin facility when market is bullish time aka market has run up significantly only then people turns more greed want to trade more so using margin.

If market turns out to be good, one can get wealthy very fast, as you put on leverage, people gain 1 you gain 2, so multiply the long term and repeating effect, you will be rich very soon.
People go from 1 to 2 to 4, you go from 2,4,16.

If market turns out to be against you, double trouble, loss on capital while still need to pay interest, worst still can't meet margin call, then have to sell everything to repay. Even market does rebound back, you actually game over as you have to sell everything you got.

One word, nothing is predictable in stock market and market always not behaving what people expected.