[StopTheWorld]

> Rule 7: Don’t use leverage.

> Using margin accounts or mortgages (for other than your home) puts you at risk to lose more than your original investment.

As this says, margin accounts used in a certain way can put you at risk to lose more than your original investment. However, they are sometimes necessary to make investments with little to no additional risk. For example I may own $50,000 worth of XYZ Corp. and want to sell it on a Monday so as to buy $50,000 worth of DEF Corp on that same Monday. I can't do that if I don't have a margin account - settlement is usually T+2 days.

You can incur additional risk with a margin account, but not as much if it's just to borrow money you are almost certain you will have in a few days.

[pjfin123]

> As this says, margin accounts used in a certain way can put you at risk to lose more than your original investment. However, they are sometimes necessary to make investments with little to no additional risk. For example I may own $50,000 worth of XYZ Corp. and want to sell it on a Monday so as to buy $50,000 worth of DEF Corp on that same Monday. I can't do that if I don't have a margin account - settlement is usually T+2 days.

This isn't really leverage. Your brokerage is just extending you temporary credit to paper over the fact that stock trades take two days to settle. You're never net long more than 100% of your investment.