How to Buy Stocks With Margi – Hello fellow traders and investors in all of Indonesia, how are you? It’s great to be able to share information again with all close friends. This time we will discuss how to buy shares on margin in other words long-term credit processes.
Yes, friends did not read the title of this article correctly. Shares can also be purchased together with credit, curious to know more? Let’s take a look at this next post.
If a close colleague mobilizes a business, what is the most common obstacle? Capital! If capital is lacking, business expansion will be slower because the stock we can provide for customers is limited so that the profit we can get is smaller. The solution is to jointly apply for capital debt.
In the world of capital markets, capital debt is then known as leverage. Friends who have been in the world of forex for a long time, of course, you are no stranger to this term. Leverage is the “leverage” of capital, we take a little bit of the example from forex. The amount of leverage in forex varies, ranging from 1:1, 1:10, 1:100 and so on.
For example, if a close friend uses 1:100 leverage from a total capital of 1,000 USD, then the strength of the close partner’s capital is 100,000 USD to carry out buy and sell transactions. Mutual transactions of this type are known as margin trading.
Not much different from the process of leverage in forex, securities also provide leverage to make it easier to buy shares on margin. The amount of leverage provided varies widely from securities companies, ranging from 1:2 times the total asset value to 1:15 of the total asset value. For simplicity, consider this next example:
For each stock trading margin transaction, close partners may be charged a fee and interest which has a term of up to one year. The amount of fees and interest varies and can be consulted together with the securities company concerned.
We take over, for example, from Mandiri Sekuritas and Phillip Sekuritas. At Mandiri Sekuritas, the margin limit that can be used is 2 times the asset, interest/year is 18% -23%, fees for buying transactions are 0.18%, while fees for selling transactions are 0.28%. Meanwhile, Phillip Sekuritas has set a margin limit of up to IDR 500,000,000 with an interest of 16% per year. The purchase fee is set at 0.18%, the selling fee is set at 0.28%.
What Should You Pay Attention To When Buying Stocks With Margin?
It is important to note that not all shares can be traded together using margin trading facilities. Every month there are several shares included in the list of stock transactions that can be traded on margin.
In May 2019, 12 new shares were included in the list of shares which can be traded together using margin or short selling facilities. This is stated in IDX announcement No. Peng-00103/BEI.POP/04-2019 which can be downloaded on the IDX web site.
In another aspect, leverage is like a double-edged sword, which, when used wisely, can protect its owner. However, if used incorrectly, it can injure the owner.
This means that margin transactions are not suitable for everyone. If an analysis error occurs when a close friend buys shares using margin facilities and it turns out that the price reverses to cause a loss, the close friend always needs to deposit the capital and interest that has been mutually agreed upon with the securities.
In this case, the losses incurred become even greater. Another solution, close friends can rack their brains to always trade stocks even with limited capital.
Therefore, first ignore wisely whether margin trading tools are suitable or not for you. It’s best to prepare sufficient funds for transactions, but if not, close friends can use this facility together with a note that close friends know and are ready with the potential impacts that can arise from margin activities.