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Understanding online broker margin rates is key when you’re looking to buy stock on margin and hold it overnight.
At CAPEX, we are well-aware of the intricacies behind assessing different trading fees on platforms. It is our belief that knowing, and understanding, different rates is pivotal for all traders. Read our latest guide that covers online broker margin rates right here.
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When it comes to answering the question, “What are margin-rates” there are a number of aspects at play. You’ll come to find that the idea behind margin requirements and margin rates stems from borrowing capital to trade online. In terms of a margin rate, this is the rate at which an online broker will charge you for borrowing capital. If you find yourself borrowing money from a bank, they’ll charge you an interest rate over time. The same is true for an online broker and this must be taken into consideration. The margin rate will be a percentage of the total amount borrowed and may well be less than that charged by banks and other financial institutions.
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When it comes to buying on margin, as we’ve outlined above, it’s important to consider several factors. You will need to note the initial margin requirement as well as the maintenance margin amount. Taking it one step further, you should also consider interest payments (margin rate) on borrowed capital over an extended period of time. For the purposes of this piece, we’re going to run through an example that only considers the initial margin requirement as well as the maintenance margin amount.
You can do this when you have a valid online broker account. Let’s assume that you have an initial margin requirement of 50% and your current account balance is $2,500. The ability to trade on margin with a requirement of 50% means you can buy up to $5,000 worth of securities with an initial amount of only $2,500. If the maintenance margin is also set at 50%, funds in your account cannot dip below $1,250. If it does, you’ll be required to bring up your balance in line with the maintenance margin.
Buying on margin will increase your overall purchasing power considerably. If you’re starting small and only have a fixed amount of capital, buying on margin will allow you to broaden your trading options and allow you to buy more securities (in dollar value) than what you have in your account.
It is important to remember that you can also lose out considerably when trading on margin. If you find yourself borrowing capital to trade for an extended period of time, you’ll also be liable to pay back a rate over and above the initial amount (margin rate). If the price of your CFD suddenly drops without warning, you will still need to pay back any money borrowed plus interest. Thus, it’s important to remember that there are significant downsides as well as upsides.
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The latest online broker margin rates will apply to borrowed capital on the CAPEX platform. However, we recommend that you first sign up and create a valid account. Once you have gone through the rigmarole of verifying your account and depositing funds, you’ll be ready to utilise any available leverage and can start trading on margin. It’s always important to remember the margin requirement.
If you do end up borrowing capital overnight, then the latest CAPEX margin rates will come into effect. You will be charged a rate depending on your account and the amount of capital that has been borrowed. You can assess your personal margin rates once you are in the position to do so.
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You’ll come to find that we, at CAPEX, provide you with the opportunity to trade using significant leverage. However, if you hold an open position overnight with borrowed capital, then you’ll be charged a fee for this. The interest rate on borrowed capital will be affected by various factors. At CAPEX, you’ll come to find that there is a margin rate that is implemented on all accounts. Bear in mind that margin rates can change regularly and we’ll be sure to inform you of any relevant changes as, and when, they come into effect.
You’ll need to take into consideration a number of factors when trading on margin. At CAPEX, we do our utmost to reduce fees across the board. However, this doesn’t mean that we can rule out all fees. Capital that is lent to traders who hold positions overnight will need to pay a margin rate on the amount borrowed. It’s not possible to simply avoid margin rates outright. We can guarantee you that the rates that have been implemented are competitive and certainly above average.
If you’re looking for more on margin rates explained, then you can simply consult the resources on offer on the official CAPEX site. You can also visit our expensive FAQ section or contact a representative. This enables you to find out all you need to know about, “What are margin-rates?” You can also find out our current policy that pertains to margin requirements and the latest leverage that we offer traders. Furthermore, don’t forget to visit our online trading school, the CAPEX Academy. All in all, you’ll be able to find out all you need to know before, or while, you use our trading platform.
At CAPEX, we aim to bring you extremely competitive rates and fees for all trading services and features. Our latest margin rates look to buck the trend of charging overly pricey rates for traders who hold open positions overnight. With our competitive pricing policy, you’ll feel more at will to trade as you see fit. Sign up with CAPEX today and start taking advantage of our transparent margin rates.