Margin (finance) - Wikipedia

NYSE margin debt rose to an all-time high in March, according to recently released data from the stock exchange. But far from being a warning that stocks are getting frothy, some traders are using the news as a positive indicator. Margin debt is created when investors borrow money in order to buy stocks.

Since margin debt provides leverage, it amplifies gains, but also increases the risk to an investor. Margin debt tends to be highly correlated with the level of the market. Higher prices tend to spur more buying—and similarly, more buying on margin tends to spur higher prices.

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And Todd Gordon of TradingAnalysis. And now we're simply waiting for the people who don't trade on margin—which is everyday investors—to come into the market. I think that's what's been missing in this advance.

Margin; Long and Short Positions, with Formulas and Examples

Of course, not all traders use measures like margin debt to help them determine their next maneuver. If I start trading based on what I think other people have in their pocket, then what am I really doing?

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Register Log In Profile Email Preferences PRO Sign Out. Trading Nation Videos Trader Bios Commentary. What record-high margin debt means for stocks Alex Rosenberg AcesRose. Trouble on market's margins? Monday, 27 Apr 4: To view this site, you need to have JavaScript enabled in your browser, and either the Flash Plugin or an HTML5-Video enabled browser.

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