Hit my leverage limit on a 4:1 ratio trade last Tuesday and realized I'd been calculating margin wrong for 6 months

I was using the total trade value instead of the equity in my account to figure margin requirements, and a buddy at my brokerage in Austin pointed it out when I almost got a margin call. Has anyone else caught a math error like this that totally changed how you trade?

2 comments

2 Comments

sage_rodriguez25d ago

Huh, I mean, I don't know if I'd call it a math error exactly... more like you were just looking at the wrong number. That happened to me with stop losses once, thought I was safer than I actually was. But hey, at least you caught it before the margin call hit.

richard_west525d ago

Take a different angle here and push back a little, @sage_rodriguez. Looking at the wrong number is still a math error in my book, just a different flavor of it, and both can cost you just the same. Sure, catching it before the margin call is lucky, but that doesn't change the fact that the mistake itself was trouble waiting to happen. In my experience, calling it what it is helps you fix the actual problem instead of just feeling relieved.