Reading: Cash versus Margin: Pros and Cons
Webull 06/09/2020 Every day, we get calls from clients asking what type of account they are trading with ( to check : tap the Webull logo, then tap details in the upper berth right corner, then scroll all the way down ). Lots of people ask “ is this the right account type for me ? ” and, well, it depends. different people trade differently. Cash accounts and Margin accounts operate differently, and there are different rules associated with each. This article will help you compare and contrast the two score types. Ps: To find out what account type you have you can click on the top left corner of your homepage to see your different accounts and what type they are! Margin Accounts margin accounts offer leverage, and carry extra risks. · With a margin bill, you may have up to 4X day craft buying exponent, and up to 2X overnight buy power. This means that if your account value is $ 3,000, you could use up to $ 12,000 to day trade, and hold up to $ 6,000 in positions nightlong. · You need to maintain a minimum of $ 2,000 of cash and/or marginable equity in a margin report to access the leverage ( 2X & 4X buying ability ).
· If your account value is $ 25,000 or more, you meet the criteria to be a practice day trader. This means that you have unlimited day trades. You can buy and sell as many securities as you like arsenic many times as you like, every day. If your account value is less than $ 25,000, you can make up to three day trades per every five rolling commercial enterprise days. The Webull platform helps you keep path of those day trades. · You may short eligible securities in your allowance account if you maintain an bill value above the minimum doorway of $ 2,000. · margin accounts offer all option trade scheme capabilities. Cash Accounts Cash accounts do not offer leverage, and you can only trade with settled funds. · With a cash bill, you trade with the money you deposit. You are not able to access leverage even if your explanation value is above $ 2,000. · Day trade rules do not apply to cash accounts, but you must abide by cash liquidation rules. · If you sell a status that you purchased with unsettled funds in your cash score, you will incur a Good Faith Violation. For case, say you have a cash report with $ 180 in it and you buy stock XYZ today for $ 180. It goes up to $ 200 an hour by and by and you decide to sell it. now you take that $ 200 in proceeds and use it to buy stock ABC. If you wanted to sell ABC, you will be able to do therefore. however, doing so would result in a dear Faith Violation. · Cash accounts offer four options strategies : long puts, long calls, covered calls, and cash-secured puts.
Overall Cash and Margin accounts offer two different ways to trade. What you decide to use depends entirely on you and your investment goals. We hope this comparison helps clarify the differences between the two account types. Webull besides supports opening one of each score type. If you choose to do then, please note that the Login IDs for the two accounts must be different ( i.e., if you use your e-mail address to log into your margin score, you must use a unlike electronic mail or your telephone total to log into your cash account ). informant : hypertext transfer protocol : //www.peterswar.net/blog/39-Cash-versus-Margin-Pros-and-Cons