MDA - Market Direction Analysis

[augieboo]

Thanks, LG! I've already added that one to the Junkpile. (:

But, (of course), I also have just a few questions -- {g} -- one of which is specific to NENG and the rest of which are general questions about margin.

Re NENG

[1] Given that we have no way of knowing which brokerages have lowered their thresholds, [ii] under what conditions they are lowered, [ii] for what stocks they are lowered, or, [iv] for which individual traders they are lowered, it is possible, is it not, that NENG could face yet another good-sized selloff if it gets down near $3.00?

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I've never used margin, and I suspect that quite a few of our lurkers haven't either, so I'll ask a few questions about that as well, (and add your answers to my junkpile too).

[1] If a trader had $100K in cash in her account, how much margin could/would she be able to get? I think it's $400K, but I'm just guessing based on something in your previous post.

[2] You said that if you do have a margin account, you use margin with every trade. Let me see if I understand you correctly:

{i} Assuming I'm correct with my guess in #1, my hypothetical trader has a total of $500K with which to trade, yes?

{ii} So, if our trader, (with $100k cash + $400k margin), makes a single trade today in the amount of $100k, it means that she has actually spent $20k of her cash, plus $80k of borrowed, i.e., margin, money. Is that right?

[3] What exactly does the term "margin maintenance requirement" mean? I'm guessing, again based on the assumptions above, that a 50% margin maintenance requirement means that you must end each trading day, (or maybe each trade?), with at least 50% of your total cash + margin in settled funds in your account? Or is it that you must have cash equivalent to 50% of the margin currently in use? Or something else?

[4] Okay, going back to our hypothetical trader with the $100k cash + $400k margin, here's the final question -- for now. {G}

Let's assume my trader is strictly a day trader -- she always closes out all trades by the end of each trading day. Could she trade $100K worth every day, in essence only using the margin to make up for the fact that da boyz pretend that it takes a few days, (rather than the actualy few seconds), to settle each trade?

TIA,

augie