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Margin Trading

The article covers the topic of margin trading account and how to enable/disable margin trading.

Overview

If your Euro Pacific Trader1 is already open, you can request to enable or disable Margin Trading by creating a case inside your eBanking Support Center.
When applying for a Euro Pacific Trader account, you can choose two account types: Cash Account or Margin Account. We compare the two account types below.

Cash Account

Most clients select the standard account type called a Cash Account. Cash Accounts have several limitations:
  • Cannot borrow to buy stock, write uncovered options, sell stock short or maintaining certain option spreads.
  • Cannot transact with unsettled funds.
  • Cannot maintain short balance in any currency. The account will be required to convert funds prior to transacting in products denominated in a currency you do not hold.
  • Subject to forced liquidation if insufficient cash to satisfy fees (e.g. market data or news subscription fees).

Margin Account

Margin Trading is simply borrowing cash to buy a security.
If you request to enable Margin Trading, please note that it comes with a host of risks and costs, one of them being the platform automatically creating a margin loan when buying a security denominated in a currency that you do not have available, leading to interest charges.
For most trading clients, margin obligations are calculated by a defined formula and applied to each “marginable” financial instrument. To read more about this formula, please read our Interest & Financing page.