What are the risks associated with margin trading?

Margin trading allows you to borrow funds from our clearing firm to buy securities. This amplifies both the potential rewards and risks involved with investing. The major risks of margin trading include:

  1. Losing more money than you deposit. The leverage allows you to lose more than the amount you contribute since you are borrowing funds. You owe interest charges on the amount borrowed regardless of any equity loss.

  2. Forced liquidation of positions. Redbridge can require you to deposit more collateral or sell securities at any time to meet margin requirements. We do not need your consent to take such actions.

  3. Margin calls without notice. Redbridge is not required to notify you or extend any grace period before issuing a margin call or liquidating positions to meet requirements. You must comply with any margin calls immediately.

  4. Voting rights or dividend access restrictions. Regulations may limit your control or access to securities that have been lent, shorted or pledged as collateral. Substitute payments may apply to short positions.

  5. Increased margin requirements without notice. Redbridge can increase house margin requirements at any time based on their discretion and market conditions. We do not need to provide advance written notice for changes. You must comply promptly to avoid forced liquidations.

  6. Loss of control or input on liquidations. Redbridge can select any securities in your margin account to sell in order to meet a margin call or requirement. We do not need your direction, consent or consideration of tax implications.

For more information, see our Margin Disclosure Statement here.