LogFAQs > #942466007

red sox 777 posted...

Saw an ad for a margin interest rate below 1% from IBKR and am considering opening a margin account. The appealing thing about it is you can pyramid (when your stocks go up, you can borrow more and use the funds to buy more shares). In a rising market with this strategy you can make a lot more than 2x what you make without margin.

Oh yeah, this is exactly what I've been doing with AVCT. Well, not quite to the extremes of your Tesla example, but I have used the gains to buy a modest amount of additional shares along the way.

The key for me in minimizing risk is just to set stop losses for the amount of shares I buy. I bought another 2300 AVCT shares at 3.80, and I set a stop loss slightly above it to even account for margin interest (though I haven't actually calculated my exact margin interest, but the interest is never much). Of course doing this can wipe away shares if there's a dip and sudden surge, but I'm pretty sure as long as I'm selling ahead of where I bought those additional shares I'd immediately be granted the margin back to add. (At least, I really hope this is the case, because I'm still down in this stock overall, but I think if your sell share count matches your buy share count, it will grant you the margin back immediately since for those specific shares it's a winning trade.) So yeah, I'm hoping that if there is a dip, the dip would continue and I could just get even cheaper shares for a stock I'm long on.

I've been really lucky to be buying right before breakouts and the support has always stayed decently ahead of where I bought more shares. Soon as the breakout happens, boom stop limit set and don't have to worry much about it prematurely triggering.

Hopefully it won't hit tomorrow since it's nearing closer to it. Honestly I wish I had sold those additional shares today when it hit 4.75 and bought back in now, but I didn't want to chance losing them. I may very well do that tomorrow though. I think the stock has attracted too many day traders and not enough investors now and it might remain flat with daily breakouts and dips back for a bit before it hopefully reaches the next inevitable leg up closer to ER. That would be perfectly fine with me; just flip my extra shares for gains and keep my baseline 5000 shares intact! Then if the stock loses steam before August ER hype kicks fully in I'll already have made enough money to not worry about holding bags like last time.

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