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How to trade US stocks with leverage


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How to trade US stocks with leverage

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  #1 (permalink)
PTA, Gauteng
 
Experience: Advanced
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Since I don't live in the US this might be a bit of a stupid question to those of you who trade stocks in the US. To trade stocks with leverage here in South Africa, you can simply trade cfd's (or single stock futures, but they are generally not as popular). By trading cfd's you are able to trade both long and short, with leverage. From what I understand, cfd's are not available in the US.

So my question is, how are US stocks traded if you want to leverage your positions and have the option to trade both long and short. I've been browsing a few US based stock broker websites and I see TDAmeritrade talks about a cash+margin account which allows shorting. What I can't tell is if you can leverage your positions.

The only thing im aware of for US stocks is options. Is there no 'cfd' equivalent?

Just trying to figure things out from across the pond and getting a bit confused.

Thanks.

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  #3 (permalink)
Christchurch, New Zealand
 
Experience: Beginner
Platform: SC
Broker: IB, BC, Dx Feed
Trading: US Equities
 
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DarkPoolTrading View Post
Since I don't live in the US this might be a bit of a stupid question to those of you who trade stocks in the US. To trade stocks with leverage here in South Africa, you can simply trade cfd's (or single stock futures, but they are generally not as popular). By trading cfd's you are able to trade both long and short, with leverage. From what I understand, cfd's are not available in the US.

So my question is, how are US stocks traded if you want to leverage your positions and have the option to trade both long and short. I've been browsing a few US based stock broker websites and I see TDAmeritrade talks about a cash+margin account which allows shorting. What I can't tell is if you can leverage your positions.

The only thing im aware of for US stocks is options. Is there no 'cfd' equivalent?

Just trying to figure things out from across the pond and getting a bit confused.

Thanks.

*You can simply trade CFD's on US stocks just like you can in SA. It's just that US residents are not allowed to trade CFDs. CFD's are taboo to the yanks but are a popular instrument among traders in Asia and the EU( low margin and tax avoidance).

TD is a rip, they just have a good platform for trading options. You're better off Signing up with IB who offer everything including DMA CFD's, decent margins, & the lowest comms you'll find anywhere-

https://www.interactivebrokers.com/en/index.php?f=commission&p=cfd1

https://www.interactivebrokers.com/en/index.php?f=marginnew&p=cfd

You can also short stocks with a Reg-t or portfolio margin account- https://www.interactivebrokers.com/en/index.php?f=marginnew&p=overview

Just keep in mind you need 25k in your account to stay within the US pattern day trader rules defined by FINRA.( this does not apply if you're trading CFD's)

"Free markets work because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can"
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  #4 (permalink)
Kansas City, MO U.S.
 
 
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I would do options. Best way to do what you're describing.

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  #5 (permalink)
Christchurch, New Zealand
 
Experience: Beginner
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DrewDown View Post
I would do options. Best way to do what you're describing.

How so? Trading options is probably the most complicated way to short a stock.

"Free markets work because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can"
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  #6 (permalink)
Kansas City, MO U.S.
 
 
Posts: 211 since Mar 2015
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I think I misread his post, thinking he wanted to be able to go long and short at the same time.

That being said, though options are more complicated than CFDs, I think learning options is better in the long run. It will force you to look from a statistical point of view.

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  #7 (permalink)
Christchurch, New Zealand
 
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Trading: US Equities
 
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DrewDown View Post
I think I misread his post, thinking he wanted to be able to go long and short at the same time.

That being said, though options are more complicated than CFDs, I think learning options is better in the long run. It will force you to look from a statistical point of view.

No doubt there's alot of value in learning how to trade options. It's a completely different ball game though, especially if you buy into the premium selling stratagies that TD push

"Free markets work because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can"
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  #8 (permalink)
Kansas City, MO U.S.
 
 
Posts: 211 since Mar 2015
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Selling premium is definitely capital-intensive.

I don't really trust CFDs, looked into them, and to me, it just seems unnecessary. Novel concept, but unnecessary.

You can go long or short with 2:1 margin on a US brokerage account - they will allow you to size up to 2x your amount of cash. With a larger account, you can do more intraday, and with a portfolio margin account (over 100k), I believe it is 4x all the time. Might depend on your broker.

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  #9 (permalink)
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Neo1 View Post
*You can simply trade CFD's on US stocks just like you can in SA. It's just that US residents are not allowed to trade CFDs. CFD's are taboo to the yanks but are a popular instrument among traders in Asia and the EU( low margin and tax avoidance).

TD is a rip, they just have a good platform for trading options. You're better off Signing up with IB who offer everything including DMA CFD's, decent margins, & the lowest comms you'll find anywhere-

https://www.interactivebrokers.com/en/index.php?f=commission&p=cfd1

https://www.interactivebrokers.com/en/index.php?f=marginnew&p=cfd

You can also short stocks with a Reg-t or portfolio margin account- https://www.interactivebrokers.com/en/index.php?f=marginnew&p=overview

Just keep in mind you need 25k in your account to stay within the US pattern day trader rules defined by FINRA.( this does not apply if you're trading CFD's)

Thanks for this. I didn't realise that you could trade cfd's with IB if you're not a US citizen. I thought cfd's simply weren't available in the US, period. I've looked through their site and the commissions and overnight interest is all really good (I get ripped off here with local brokerages which is why im investigating moving my account).

I notice they mention a minimum of USD10 000 to open an account: https://www.interactivebrokers.com/en/index.php?f=4969
That's fine as I would likely be moving across roughly this amount, however does this mean your balance has to always stay above 10 000, or is that simply the opening requirement after which it is allowed to drop below?

Im going give the demo platform a go today. I presume the demo allows you to trade cfd's....

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  #10 (permalink)
Christchurch, New Zealand
 
Experience: Beginner
Platform: SC
Broker: IB, BC, Dx Feed
Trading: US Equities
 
Neo1's Avatar
 
Posts: 428 since Jul 2014
Thanks: 471 given, 496 received



DarkPoolTrading View Post
Thanks for this. I didn't realise that you could trade cfd's with IB if you're not a US citizen. I thought cfd's simply weren't available in the US, period. I've looked through their site and the commissions and overnight interest is all really good (I get ripped off here with local brokerages which is why im investigating moving my account).

I notice they mention a minimum of USD10 000 to open an account: https://www.interactivebrokers.com/en/index.php?f=4969
That's fine as I would likely be moving across roughly this amount, however does this mean your balance has to always stay above 10 000, or is that simply the opening requirement after which it is allowed to drop below?

Im going give the demo platform a go today. I presume the demo allows you to trade cfd's....

10k USD is just the min balance to open an account. The min to trade on margin is 2k.

"Free markets work because they allow people to be lucky, thanks to aggressive trial and error, not by giving rewards or incentives for skill. The strategy is, then, to tinker as much as possible and try to collect as many Black Swan opportunities as you can"
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