Margin Calls adding fuel to the fire

[Pager]

I spoke with my Margin loan providor this morning about another matter but during my conversation I asked if many people were getting Margin Calls.

Sounded like there are a lot of people going to get well and truly stung when they have to sell stock to cover their loans.

Looking at my own LVR its increased significantly the past week, well away from having to sell any stock but think a lot of those who took new loans at the end of June and then invested are going to be well and truely burnt, most Margin loan providers did very healthy business prior to June 30

 

[Awesomandy]

That is very true. I have a highly leveraged loan myself, but I stick to my stop losses, give or take a % point or 2, so I'll virtually never get a margin call.

 

[Struzball]

I thought I was extremely safe a few weeks ago... and even fairly safe one week ago. But another 8% drop and I'll be getting a margin call.. That will mean all ords will be at 5000 points.

So fingers crossed it doesn't get that low! I suppose i learnt an important lesson about leverage, I definately didn't expect a 20% drop was possible..

 

[jonojpsg]

When do margin calls turn up? I know it's based on LVR but if you go into the red,do they call you at close of trade?

 

[shinobi346]

They allow you a buffer of a few percent. If it reaches the buffer I would put more stock in or reduce my loan. Better to make the decision on what to do then letting them do it.