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The Water Cooler
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Help a Dummy Get Started Day Trading
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<blockquote data-quote="zghorner" data-source="post: 2879055" data-attributes="member: 35089"><p>yea I was way off on margin calculation...amount borrowed X interest rate -> / 360 -> X number of days borrowed.</p><p></p><p>From Investopedia:</p><p></p><p><em>Suppose you want to borrow $30,000 to buy a stock that you intend to hold for a period of 10 days.</em></p><p></p><p><em>In order to calculate the cost of borrowing simply:</em></p><p></p><p><em>Take the amount of money being borrowed and multiply it by the rate being charged:</em></p><p></p><p><em>$30,000 x .06 (6%) = $1,800</em></p><p></p><p><em>Then take the resulting number and divide it by the number of days in a year. The brokerage industry typically uses 360 days - not 365:</em></p><p></p><p><em>$1,800 / 360 = 5</em></p><p></p><p><em>Next, multiply this number by the total number of days you have borrowed, or expect to borrow, the money on </em><a href="http://www.investopedia.com/terms/m/margin.asp" target="_blank"><u><em>margin</em></u></a><em>:</em></p><p></p><p><em>5 x 10 = $50.</em></p><p></p><p><em>Using this example, it costs $50 to borrow $30,000 for 10 days.</em></p></blockquote><p></p>
[QUOTE="zghorner, post: 2879055, member: 35089"] yea I was way off on margin calculation...amount borrowed X interest rate -> / 360 -> X number of days borrowed. From Investopedia: [I]Suppose you want to borrow $30,000 to buy a stock that you intend to hold for a period of 10 days.[/I] [I]In order to calculate the cost of borrowing simply:[/I] [I]Take the amount of money being borrowed and multiply it by the rate being charged:[/I] [I]$30,000 x .06 (6%) = $1,800[/I] [I]Then take the resulting number and divide it by the number of days in a year. The brokerage industry typically uses 360 days - not 365:[/I] [I]$1,800 / 360 = 5[/I] [I]Next, multiply this number by the total number of days you have borrowed, or expect to borrow, the money on [/I][URL='http://www.investopedia.com/terms/m/margin.asp'][U][I]margin[/I][/U][/URL][I]:[/I] [I]5 x 10 = $50.[/I] [I]Using this example, it costs $50 to borrow $30,000 for 10 days.[/I] [/QUOTE]
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