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Friday, May 26, 2017

Buying Stocks on Margin – What happens when shit goes crazy?

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Hello,

I’m pretty much into FX Trading and figured out that my strategy works out for some stocks as well. Now I’d like to “Trade” these stocks in the weekly chart (to minimize gapping risk).

Regarding that I got one question:

What happens if I buy a stock long on margin (so that I risk 1% of my capital for lets say a stock movement of 2$, at the stock price of 100$) and the company goes bankcrupt? If a company goes bankcrupt, will the price drop by the nature of the markets to zero (without any time involved) or will it crash just like for instance gold sometimes? What I mean with this is: Would my stop get triggered with some slippage maybe but would still work out? Or would I need to pay the broker all the money I basically borrowed from the broker through the leverage/margin?

Thank you

submitted by /u/x6Taifun
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May 26, 2017 at 04:06PM

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from /u/x6Taifun

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