My broker friend gave me advice on margin that nearly cost me $2,000

A buddy of mine who works at a big brokerage kept telling me I was dumb for not using margin on my trades. He said I was leaving money on the table by not borrowing against my stocks to buy more. I finally caved and opened a margin account with my current broker about 6 months ago. Everything was fine until the market dipped 8% in a week. I got a margin call and had to sell some positions at a loss just to cover it. Lost about $2,000 in total between the dip and the forced sales. Should have just stuck with my boring bank savings account for the extra cash. Has anyone else had a friend push them into something that backfired like this?

2 comments

2 Comments

irishenderson2d ago

Feel like you gotta ask yourself why your friend was so pushy about it... were they just trying to look smart or did they actually believe in it? I mean, brokers get paid when people trade more, right? Not saying your friend was being sneaky on purpose, but there's a reason they push margin and active trading so hard. It's easy to get caught up in the hype when someone you trust keeps telling you you're missing out. But that 8% dip shows how fast things can flip... a savings account might be boring but at least you sleep okay at night. Did your friend ever apologize or admit they were wrong about the advice?

holly8982d ago

Wait, he never even apologized for that? That's pretty cold, @irishenderson.