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Here's a link to a TheStreet.Com article about discount brokers limiting margin trading on ATHM and many other stocks considered volatile (primarily internet stocks).

http://fnews.yahoo.com/street/broker.html

This will reduce daily volume for ATHM, which is generally considered a bad thing. However, I'm in favor of the brokerages' action. I prefer that online investors are protected from 'dangerous' trading (from themselves?) and that volatility decrease a bit. I spend a bit of time in the wee hours of the morning (I've got a newborn) in Yahoo and Excite stock talk chat rooms. Many foolish folk are killing themselves with poor margin trading.
It's their problem, not ours, but I hate to see it happen anyway. Maybe now they can learn a little before they commit financial suicide.

Grin
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Here's a link to a TheStreet.Com article about discount brokers limiting margin trading on ATHM and many other stocks considered volatile (primarily internet stocks).


Yeah I got a letter from Ameritrade saying things like that, Also, They are purposely delaying confirmation reports on some of those stocks so you wont go in and out too fast. ATHM wasnt on the Ameritrade list
the mataburro
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Regarding margin trading in general, I saw a good article on it that suggested if you do want to leverage your investment in what you consider "a sure thing", you should limit the margin to about 20%, even though they let you go up to 50%. The reasoning is that if you margin to the hilt and the stock takes a temporary correctional downturn, you may be forced to sell at a margin call. You would then lose this real money in addition to the opportunity cost when your winner takes off without you. The odds of getting called on a temporary correction with 20% are far less than 50%. Wise advice (meant in a good way) for anyone thinking about margin trading.

Grinatcha wrote:

However, I'm in favor of the brokerages' action. I prefer that online investors are protected from 'dangerous' trading (from themselves?) and that volatility decrease a bit. I spend a bit of time in the wee hours of the morning (I've got a newborn) in Yahoo and Excite stock talk chat rooms. Many foolish folk are killing themselves with poor margin trading.
It's their problem, not ours, but I hate to see it happen anyway. Maybe now they can learn a little before they commit financial suicide.


I agree that it's their problem. With the huge speculative runup in internet stocks, there are a lot of greedy bastards trying to get rich quick. I don't feel any worse if they lose money than I do the poor bastards who lose their shirt in Vegas all the time. You certainly don't feel sorry for those that get rich, why should you feel sorry for ones who were trying to get rich without their own labor, sweat, etc. Having this happen to them may be a valuable lesson that will enrich their perspective. Just my opinion, of course, but I think you should work for a living and not gamble with any money that you need.

nole1
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<< However, I'm in favor of the brokerages' action. I prefer that online investors are protected from 'dangerous' trading (from themselves?) and that volatility decrease a bit. >>

Indeed, themselves. The Wall Street Journal a few weeks ago had an article about investors who used online trading, lost a bundle, then blamed the online discounters for not warning them.

You KNOW this is the same reason why we don't have Kinder Eggs in the United States.


Washu! ^O^
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