Buy on Margin, How it works?

**yong_liu** Sat Sep 10, 2005 10:39 am

Buy on Margin, How it works?
Could anyone help me to understand how buy on margin works
I'm considering using margin to buy more stocks because I used up all the cash now but I have some margin buying power in Ameritrade. I read a few articles but I am not very clear. Here are my questions.
1. Say I bought $5000 stock AAA on margin on day 1 . Then I sold stock BBB $3000 on day 2. Will the $3000 be collected buy the broker to automatically pay the margin money I borrowed or I have to tell the broker to use the money to pay the margin money or I cannot pay back the margin money before I sell the stock AAA at all?

2. The second question is related the first one. Say if I already owe ameritrade $5000. Later on, I want to buy $1000 stock CCC by cash. So I wire $1000 case to ameritrade. I'm not sure where the $1000 goes. Is it used to repay the margin money or it just stays there as cash so that I can use it to buy the stock CCC on cash?

Thanks for help.

**shu_wd** Sat Sep 10, 2005 10:48 am

1. it will pay the margin first,
2. it will pay the margin first, but, you don't need to have "cash" to buy,
you can use margin to buy stock if you haven't reach the max margin