LogFAQs > #947585054

Sunroof posted...

So I called up Vanguard to get some clarification. Firstly, I am designated as a Patterned Day Trader. This allows me to buy up to four times what I have in my account. I have a little over $113k meaning my total buying power is slightly above $455k. My next question was how does borrowing margin money work. I found out that it depends on how much money you borrow, but for over $250k its like 6% annualized. So, if I borrowed $250k and sold the same day, youd do $250k times 6%, then divide by 360 (not 365). If it was borrowed for two days, youd divide by 359. Etc.

Can you imagine if I put $455k into a stock??? Even if it went up 1% throughout the day, Id make $4,500. But I am way too conservative. I would be worrying about the stock plummeting 10% in one day thus essentially halfway bankrupting me...

If it dropped 25% in a day it would bankrupt you.