What Are LUPA Stocks?

Finance

You may have heard stock traders discussing “LUPA” stocks. But what are they?

LUPA is a relatively new acronym that refers to four high-profile tech companies that have made their public debuts in recent years:

  • Lyft Inc
  • Uber Technologies Inc
  • Pinterest Inc
  • Airbnb Inc

Take the first letter of each stock and you get LUPA. These stocks are also referred to as “PAUL” stocks.

In this article, we will first look at LUPA stocks as a whole then drill down into each stock.

LUPA Stocks

LUPA stocks are often grouped together for a number of reasons. First, they are all tech companies, meaning that they all generally operate within the same market sector.

For example, Lyft and Uber both operate online ride-hailing services, Pinterest runs an image-based social media network, while Airbnb is an online home-sharing giant.

Second, before they went public, these companies were “unicorns,” which meant that private equity investors had valued each company at more than $1 billion. Lastly, they are all recent IPOs that hit public markets with a mix of copious red ink and heady growth.

Here is a deeper look at each of the LUPA stocks to help you understand their business model and growth potential.

Lyft (NASDAQ: LYFT)

Lyft began trading on the NASDAQ on March 29, 2019 and became the first ride-hailing company to become publicly traded in an eagerly-awaited market debut that netted it a valuation of about $18 billion.

Lyft and rival Uber have been challenging each other for dominance in the ride-hailing industry for years.

However, Lyft is only available in is only available in Canada and United States unlike the world-spanning Uber. Lyft boasts a market share of about a 35% in the United States.

But like Uber, Lyft is also deeply unprofitable. Both companies provide basically the same basic services so the competition boils down to market share, driver pay, and other factors that can help get them to positive cash flow.

Shares of Lyft soared 8.7% in its first day of trading after opening at $87.24, well ahead of its initial public offering price of $72 per share. But the stock has taken quite a hit since completing the IPO. It is currently changing hands at $57.06 per share with a market cap of about 18.79 billion.

Uber (NYSE: UBER)

Uber went public in May 2019, ten years after Garrett Camp and Travis Kalanick launched the company. The Lyft competitor priced its public offering at $45 a share valuing it at about $82.4 billion. It raised $8.1 billion from the offering.

But the stock began a downward trajectory as soon as it went public. At the time of this writing, shares of Uber are currently trading at $49.80 apiece.

There have been concerns from investor about the company’s business model and workplace culture. Uber has previously been rocked by a series of scandals, including sexual harassment, embarrassing leaks about the conduct of top executives, and questionable spy programs. Kalanick was ousted as CEO of ride-hailing behemoth after a shareholder revolt in 2017.

The company also faces stiff competition both in its ride-sharing and food delivery services, and price wars with Lyft and other rivals in each market are projected to continue.

While CEO Dara Khosrowshahi described Q1 2021 as the “best quarter ever” for Uber as gross bookings hit an all-time high, the company still posted a net loss of $108 million.

However, that was a drastic improvement from the $968 million net loss the company recorded in the fourth-quarter of 2020.

Pinterest (NYSE: PINS)

Pinterest is a social media site that allows users to visually share, and discover new interests by “pinning” videos or images to their own or other’s board and browsing what users have pinned.

People use it to get inspired across a variety of subjects like interior design, cooking, clothing and travel. Simply put, it is a visual platform optimized to inspire users with new ideas and understand one’s tastes.

Shares of Pinterest began trading in April 2019, giving the company a valuation of $10 billion.

Pinterest has been able to put together a solid business since it was founded in 2010. As of Jan. 2021, the company ranks as the 14th biggest social media network in the world in terms of global active users. It ranks below social sites such as Facebook, Snapchat, Instagram and TikTok — but above Twitter.

In 2020, Pinterest added more than 100 million monthly active users, its biggest ever increase. While the company does not pose much of a threat to social media titans Google and Facebook, some analysts believe there is still room for it to grow.

The core of its philosophy is that by inspiring its users with products, ideas, etc., it creates value for both its shareholders and its users. Over the last year, the company has raised its average revenue per user (ARPU) substantially in all markets, while user growth was reasonable.

Airbnb (NASDAQ: ABNB)

Airbnb finally hit Wall Street in December 2020 after years of toying with the idea of whether to become a public company or not.

The IPO capped a meteoric rise in valuation for the company. According to PitchBook, Airbnb’s Series A fund-raising round in 2010 gave it a valuation of $60 million.

A decade later, during a pandemic that has battered the travel industry, the company is worth more than $100 billion, or more than Marriott and Expedia combined.

Airbnb has already rapidly grown since it was founded in 2008, but it is expected to expand even further now that it has gone public.

The home-rental company has also made several acquisitions in the last few years to expand its offerings. The most notable acquisition is HotelTonight, an app that allows users to book their stays last minute. Airbnb completed the acquisition of HotelTonight in 2019.

Airbnb has a network of more than 4 million hosts spread across 220 countries and more than 100,000 cities. The company derives just over 50% of its revenues in North America, another 30% in EMEA, and the rest in Latin America and Asia-Pacific.

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Want To Become A Day Trader? Here Are The Pros And Cons

Financial Advise

Day trading has grown in popularity particularly in the past year as more and more individuals sought financial freedom and the ability to live life in a way that is meaningful and fulfilling to them amid the global coronavirus crisis.

The surge in amateur day traders has helped to create a record number of new accounts at brokerages like Robinhood, TD Ameritrade, and Charles Schwab (NYSE: SCHW).

Such small-scale traders now account for a fifth of overall stock-market trading activity, according to some estimates.

In this article, we will dig deeper into the main benefits and downsides of day trading to help decide whether day trading is the right thing for you.

What Is Day Trading?Day trading is one of the most common trading styles that is used by traders around the world.

This speculative trading style involves opening single or multiple trades during a day and exiting them by the end of the current trading day.

Simply put, day trading is the act of buying and selling stocks on the same day, based on price fluctuations.

Example

If you open a new position at 8:45 a.m. and close it by 2:00 p.m. on the same day, you have completed a day trade.

If you were to open the position and fail to close it later that same day, it would not be considered a day trade.

Unlike in position trading or swing trading where trades are held for weeks or days, day traders can immediately analyze their trading performance by the end of the day.

Day traders generally spend over 2 hours every day to watch short term price movements and trade setups. They use advanced charting systems that are plotted by 1, 5, 15 or 30 minute intervals.

Pros Of Day Trading

Under the right circumstances, day trading can be an amazing career option with plenty of benefits. Let’s take a look at a few of them.

However, this line of work isn’t for everyone. Successful day traders need to be self-motivated, disciplined, levelheaded and financially independent.

If you’re thinking about pursuing a career in day trading, compare your own personality profile against this list of key characteristics and personality traits.

  • You are your own boss

To begin with, most day traders work from home and don’t have hard-nosed bosses telling them what to do at all times. Even better, successful traders may earn enough money to live life comfortably.

They simply stay on task during trading sessions and commit to intensive preparation and research sessions. After settling upon a profitable strategy, they stick with it until it no longer works.

  • Day trading provides you an opportunity to earn a comfortable living

There are not many things that can equal the emotional high that comes with a sweet profit achieved solely by the effort of a single individual.

As a day trader, you have the opportunity to make a great living, provided that you have a well thought out strategy, understand the inner workings of the financial markets, and can afford to take the risk.

For example, on March 7, 2015, an options trader raked over $2.4 million based on a single news wire in just 28 minutes.

According to CNBC, the trader executed the trade after a respected Wall Street Journal reporter tweeted at 3:32 pm that Intel (NASDAQ: INTC) was holding talks to acquire Altera.

Shares in Altera began to shoot up, so much so that the stock was halted after only three minutes at 3:35 pm. But within that short time period, the trader was able to place a bid for 300,000 Altera options at $36 a share.

At the closing bell, Altera shares were up $44.39 helping the trader to make more than $2.4 million.

Granted these types of gains are not normal and shouldn’t be expected especially if you’re just starting out. But it is possible.

You can also make or lose more money by utilizing leverage i.e., money that you borrow from your broker to in order to trade more, which most day traders use.

  • A variety of trading strategies

Day traders has several trading strategies they can use to trade across all major markets. Some of the most popular day trading strategies include trend-following, breakout trading, and counter-trend trading.

  • Overreaction to news

Markets consist mostly of humans, and they tend to overreact to news.

This is why you will see big price moves when certain news is released. Day traders often take advantage of that behavior and squeeze out extra profits.

Volatility is what day traders look for.

Cons Of Day Trading

Day trading can be rewarding, but it also carries a high risk. First, there is never a guarantee that you will earn money.

As a matter of fact, the U.S. Securities and Exchange Commission (SEC) says that “day traders typically suffer severe financial losses in their first few months of trading.”

A good example is what happened in late January during the Gamestop Reddit mania that puzzled Wall Street and triggered federal scrutiny.

Shares of some heavily-shorted stocks including Gamestop (NYSE: GME) rocketed to record highs before plunging back to earth.

While some traders made a fortune by trading these stocks, those who failed to time the trade perfectly lost money.

Here are two other top risks in day trading:

  • It requires capital

Day traders need to have the right computers and software to access the necessary financial information and spot the price variations.

The U.S. law also requires that day traders maintain a minimum of $25,000 in their trading accounts at the end of the trading day if they want to make at least four round-trip trades over a period of five days.

In addition, taxation can become a nightmare because you may acquire capital gains and losses when day trading various instruments available in financial markets.

  • Success tends to be closely tied to the state of the current market environment

When the market is in a period where there is no huge upward or downward moves, day traders often lose their cash by churning their accounts and holding onto losers too long.

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How Many Day Trades Can You Make In A Week?

Financial Advise

As with kicking off any career, there are plenty of things you should learn if you have dubbed yourself a brand-new day trader.

Not only will you need to decide what to trade, when to trade, how to manage your risk, but you’ll have to get the right software and equipment, and of course, determine how many day trades you can make in your brokerage account.

In this detailed guide, we will go over how many day trades you can make in a week depending on what type of account you have. 

What is a Day Trade?

A day trade is when you buy or short a financial instrument and then sell or cover the same instrument in the same day with the goal of making a profit.

For example, if you buy 100 shares of XYZ stock at 9 am and sell all the shares at 1 pm on the same day, you have completed a day trade. Just opening, without closing that position that same day, would not be considered a day trade.

Another day trade example is when you open a position to purchase 200 shares of XYZ stock at 9:30 am, followed by a purchase of another 200 XYZ shares at 2:30 pm, followed by a sale of 400 XYZ shares at 4 pm.

In addition, if you short sell 150 shares of XYZ stock at 9:30 am and then open a buy position to cover 150 shares of XYZ stock at 10:30 pm, you will have made another day trade.

Individuals who indulge in this style of speculative trading are known as day traders. The most common day traded financial instruments are stocks, futures, and forex.

Day traders typically make use of technical analysis tools and a trading strategy to try and profit off within a short period of time and will often take advantage of portfolio margin to boost their buying power.

Successful day traders don’t just trade any stock they come across. They have to be fully prepared with a well-planned strategy and employ a wide variety of techniques.

Cash Accounts and Margin Accounts

If you are looking to day trade securities, you can do so using an online brokerage account. Generally, there are two main types of brokerage accounts: cash account and margin account.

The difference between a margin account and cash account is that the margin account lets you borrow from your broker while the cash account does not.

In other words, when you open a cash account with a broker, you will be required to pay in full for the securities you buy for your account. If you have $200, you can only buy $200 worth of securities, and can’t use the securities in your account as collateral to borrow more money.

On the other hand, if you open a margin account, you can borrow money from the broker to buy securities, using those securities as collateral for the loan. Generally, when applying for this type of account, the process has to be approved by the broker to make sure you are qualified for the account.

Margin accounts also come with special features for active traders, like short selling.

Now that your understand the difference between the two accounts, let’s dig deeper to find out how many day trades you can take in a week in a cash account and how many you can take in a margin account if you are under $25,000 and if you are over.

How many day trades you can take in a week in a cash account?

One of the main benefits of day trading using a cash account is you can place as many day trades as you would like until you cash is used and won’t be held to the pattern day trading rules in a margin account.

But you will have to wait for your trades to settle before you can proceed to use that cash again. Typically, it takes one day from the trade date for options and two days from the trade date for stocks.

Example: If you have $10,000 in your cash account and you buy and sell $2,000 worth of stock, then you have $8,000 left to day trade until the $2,000 you used settles in two business days.

Cash accounts don’t follow the dreaded Pattern Day Trader Rule (PDT) rule that may prevent traders with less than $25,000 equity in their accounts from executing 4 day trades or more in a 5 day period. This is a huge benefit for traders who don’t have the extra $25,000 lying around.

The PDT rule was implemented back in 2001 by Financial Industry Regulatory Authority (FINRA) as a safety measure to help minimize the risks associated with day trading.

How many day trades can take in a margin account if you are over $25k?

When trading on a margin account, you will be subject to the pattern day trading rule, meaning you will be required to maintain a minimum of $25,000 in equity in your account if you place more than 4 intraday roundtrip trades in any rolling five-day period.

If your account is labeled as a pattern day trader, you will have to maintain that account minimum and if you don’t, you will not be able to day trade.

If you do have the minimum equity requirement in your margin account, you will be given day trading buying power which is 4x more than normal amount.

So, if you have $26,000 in your margin account, for example, you can trade up to $104,000 per day as long as you maintain the $25,000 minimum margin amount.

Keep in mind that day trading buying power can not be held overnight.

How many day trades can take in a margin account if you are under $25k?

If you have less than $25,000 in your margin account to day trade, you can get around the PDT rule by making only three day trades in a five-day period. But this means you’ll need to pick a stock from several valid trade signals, so you are not going to receive the full benefit of a proven strategy.

Essentially, if you have a $5,000 account, you can execute three-day trades in any 5 consecutive trading days. Once the account value surpasses $25,000, you will not be affected by the PDT restriction.

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Why You’re Not Making Money Consistently With Your Trading

Financial Advise

The stats are pretty clear – over 90% of people who day trade are not able to generate consistent profits.

This pretty shocking statistic means only a handful of traders actually have anything to show from their day trading activity and some have sadly lost money.

And still millions of people around the world still engage in day trading, many of them on a regular basis.

Once primarily practiced by professional investors, day trading is increasingly becoming popular thanks to superior online trading platforms and free-stock trading apps such as Robinhood.

But what is going on? Why do so many people lose money while trying to profit from market fluctuations and how can you join the 10% of traders who are consistently profitable enough that they have made it their full time living.

Why Most Traders Lose MoneyLike Ross Cameron says, day trading is the hardest yet easiest job in the world. What he means by that is that you can trade on your laptop from home or a hotel room from almost anywhere in the world, as long as you are connected to the internet.

It is an easy and amazing job.

You are not hammering roofs in August or going out on the highway in 10 degree below weather in the middle of January. But while day trading is a pretty nice job in a lot of ways, it is very hard in some aspects since 9 out of 10 traders fail.

So, what are some of the reasons for those failures and why do most traders struggle to turn a profit.

  • They lack of a trading edge/strategy

One of the reasons why most traders fail to bring their trading to its full potential is because they trade without an edge or strategy that works. Most traders don’t even have a clue what a trading edge is, let alone how to develop one.

A trading edge is when you can identify something in the market that gives you an advantage or insight into how well a trade will do.

Whether you are a beginner trader or have been trading for some time, a trading edge is necessary as it can greatly keep you on track to achieve profitable and steady trading results.

  • They fail to review their trade results

The second reason is because they don’t keep a record of their past trading activities that they can go later study to sharpen their skills.

Chess masters keep journals to record down their thought process of the game and their plays. Scientists have journals to track their latest findings and the results of their experiments.

This should be the same for traders! Unfortunately, only a few traders have a trading journal that they use to review their trades.

  • They trade with emotion rather than systematically

Thirdly, many traders fail to control their emotions when trading and end up ruining their hard-earned cash. For instance, after having multiple losses in a trading session, a trader is afraid of having a losing day.

This worry triggers the trader to over-leverage and blow up their trading accounts.

It can also cause FOMO. One of the most common trading emotions you will come across, which stands for fear of missing out.

This happens all the time when you see a hot stock that is ripping higher and all you want to do is buy some shares but can’t get a good entry so you end up chasing it. This usually results in a bad entry and increases the likelihood of taking losses.

  • Lack of discipline

Discipline is the most important trait of successful trading.

Lack of discipline is often the cause of the most common trading mistakes like executing trades prematurely, over-trading, revenge-trading, breaking trading rules, violating risk management rules, making impulsive trading decisions, and more.

All of these things mostly result in losing much more cash than what a trader had initially projected and what would be necessary.

What You Can Do To Realize More Success In Your TradingTo avoid both of these mistakes and become more successful, traders ought to a few important things that we’re going to discuss in the following section:

Define your trading edge

Focus on a strategy that makes sense to you and master it as opposed to trading all types of strategies.

For example, Ross focuses on small cap momentum. Basically, a small cap is a company with a market capitalization of between $300 million and $2 billion.

Ross has mastered several small-cap trading strategies and knows how to find support and resistance on charts. His trades are mostly based on small cap stocks that rise 20-30% or more in a single day. These stocks are typically priced between $2 to $10.

So, instead of trading Apple (NASDAQ: AAPL) and many of the other large cap stocks, Ross prefers to trade small cap stocks which are generally more volatile.

Review your trading process with an open mind

 As mentioned earlier, most traders never look at their trades again once they have closed them. They just jump to the next trade, forget everything they did previously, and completely avoid learning effects.

Make sure to review your trading process on a regular basis. Keep an open mind while doing so and it will show you everything you need to know.

You also have to be wary that if you are too stuck in your ways, you will end up imposing your ideas on what the market ought to do, instead of reacting to what is really happening.

Make revisions where you see weakness in your trading

Most traders do not understand why they need to revise their strategy. You need to take your trading strategy through a process of trial and error for it to be complete. While this will take time, it is effective and works perfectly with the market and increases the chance of success.

One easy way you can do this is by writing down the mistakes you make frequently and putting those physical notes next to your trading screen where they can see them at all time, so they can help you become more aware of your actions.

Always work on improving and adapting to market conditions

Having a trading strategy is not enough.

You constantly have to change your trading behavior from trade to trade in order to adapt to changing market conditions. If you don’t adapt to constantly changing market conditions, you will never be able to make decent profits in trading.

Volatility is the factor that keeps on changing and when it changes, you have to change your trading strategy too. By adjusting your trading approach and analyzing volatility accordingly, you can provide a whole new level of help to your trading strategy.

Traders have to know what to change, why to change it and when. While no trading strategy works 100% of the time, it is your responsibility to find ways to make your trading strategy work in every market condition.

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Stock Broker Essential Guide

Finance

When you want to day trade stocks, options, currencies, futures, or other financial instruments, you need a broker who will execute the trades in the market on your behalf.

The broker you choose is a very important decision. They will play a key role in helping you to trade in the market day in and day out.

We have prepared this stock broker guide to help both beginner and experienced traders to understand the role of brokers, what they are, how to choose them, what to look for, and the importance of choosing the right one for your trading.

We are also going to provide a list of the best brokers that you can rely on in your trading journey.

All About Brokers

A broker is an intermediary between buyers and sellers of financial instruments. Their role of is to facilitate the buying or selling of these instruments for a commission or fee.

There are many well-known brokerage firms in the U.S. through which you can use to trade in financial markets.

In addition to facilitating the purchase and sale of various instruments, some brokers also offer an array of services to their clients such as financial advisory services, portfolio management, retirement planning, depository services, and mutual funds services.

You have probably seen brokers showcased in movies as guys wearing suits, picking up their telephone and calling their clients to inform them about hot stock tips.

While these on-screen portrayals of brokers are accurate, the financial industry is transforming rapidly, and the traditional brokers as we know them are slowly becoming extinct.

With the advancement of technology, it is now easier for traders and investors alike to transact online, thanks to the emergence of online brokers.

Online brokers are convenient, as traders can place orders, make changes and check quotes from anywhere. These brokers also facilitate faster execution of trades, enabling traders to take advantage of market volatility in a better manner.

Importance Of Choosing The Right Broker For Your Trading

Choosing a day trading brokerage firm is the imperfect storm of science and art.

The art, of course, is the cosmic connection that has to be there between you and the broker you are counting on to execute your trades. The science is all the research that you put into it. You require both.

Your decision on whether to stick with the broker, though, should not be based on science or art — but on your individual priorities.

How To Choose Brokers

The basic things to remember when picking a broker are simple and few. Undoubtedly, your first priority should be to make sure that your funds are in safe hands.

The best way to take care of this by ensuring that you only use a brokerage firm based in and regulated by a financial regulator in a respected financial center.

Once you have taken this precaution, look at what the broker offers in terms of:

  • Commissions, ECN fees, data fees, margin fees and fees for phone order executions.
  • Speed of trade execution and platform stability.
  • Range of available financial instruments to trade (stocks, options, commodities, OTC, forex, futures, and eve access to international markets).
  • Customer service.
  • Customer incentives for new traders.

It doesn’t really matter which broker you choose, so long as you feel like your hard earned money is safe and the broker provides the necessary tools for you trading style.

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Can A Broker Sell Your Position Without Permission?

Finance

Robinhood was at the center of the unprecedented and monumental Reddit trading mania that saw shares of GameStop (GME) and other companies, including headphone maker Koss (KOSS) and cinema operator AMC (AMC) soar to extreme levels as amateur traders piled into the stocks earlier this year.

However, the popular trading app was accused of selling off the Reddit stocks without customers’ permission.

Selling stocks out of a client’s brokerage account without authorization in order to maximize the broker’s commissions is generally considered unauthorized and illegal trading.

The circumstances under which a broker is authorized or unauthorized to sell your position depends on the broker agreement the trader has signed and the type of brokerage account.

However, unauthorized selling of positions is very rare in an online discount stock brokerage account.

That said, your first resource should be your client agreement that you signed when the brokerage account was established. This document outlines all of the permissions and authority given to your broker to execute on your behalf.

Discretionary vs non-discretionary accounts

According to the Financial Industry Regulatory Authority (FINRA) unauthorized trading is one of the most common problems that traders and investors should watch out for.

Generally, if a broker sells your position without your consent and knowledge, they could be liable for unauthorized trading. In situations like these, the main issue is determining what kind of account you had with that broker.

There are various types of brokerage accounts and some of them are subject to unauthorized trading rules while some are not. In this blog post, we’re going to focus on discretionary and non-discretionary accounts, as well as margin accounts.

Discretionary accounts

A discretionary account is an account that gives a brokerage firm the right to make individual trades without the permission of their client.

If the terms of the client agreement you signed with the broker give the firm the right to use its own discretion to make trades in your account, you have given prior consent and the broker will probably not be liable for unauthorized trading.

Non-discretionary accounts

A non-discretionary account, on the other hand, is an account that gives the client the authority to always decide whether or not to make a trade.

Therefore, an account must have to be non-discretionary in order to qualify as an unauthorized trade. Basically, a non-discretionary account means that the broker must get prior consent before carrying out any transactions in securities.

If your account was non-discretionary and the broker sold some securities without your consent, he likely broke several securities laws.

What if you have a margin account?

While the laws regarding unauthorized trading vary from state to state, there is an exception when a broker may make a trade in a non-discretionary without the broker getting prior permission from the client for the said position.

For instance, if you have a margin account and the value of the account drops below the broker’s requirements, they may be able to sell your positions without seeking your approval beforehand.

Basically, a margin account is a type of brokerage account that allows you to buy securities on margin by borrowing money through your broker.

Buying on margin allows you to buy more shares than what you could otherwise be able to buy with just the money in your cash account (buying power).

There is a $2,000 minimum requirement for margin accounts, but you will be given 2:1 leverage, which means if you have $2,500 in the account you will have up to $5,000 in buying power.

Consider a scenario where you buy a stock for $200, and the stock price goes up to $250. If you purchased the stock using a cash account, then you will receive a 25% return on your trade.

But if you purchased the stock on margin, paying $100 in cash and borrowing $100 from your brokerage firm, then you will earn a 50% return on the money that you used.

However, not all stocks bought on margin will rise in value. If the price of the stock goes down, then your loss will be amplified in the same way.

Using our example, a $200 stock that falls to $100 represents a 50% loss in a cash account, as well as a 100% loss in a margin account (plus interest on the $100 loan).

If the value of the collateral in your trading account dips below the required margin threshold, then the broker may issue a margin call.

Basically, this is a request by your broker to repay the money you borrowed by immediately depositing additional securities or cash to raise the account value above the maintenance margin.

If you fail to pay the margin call, the broker has the right to seize your positions and begin liquidating them to recover them loan.

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