So should you use a cash account or a margin account? What's going on, guys? It's Ricky here with Techmed Solutions and this is a question a lot of beginners begin to ask themselves and I wanted just to give you a straight up answer at the end of the day. It really doesn't matter on which account you end up choosing to go with when you're just getting started. The focus shouldn't be to try to make money right away as you're just getting started in the stock market. Anyways, it should be to understand and to learn how it is that the market works and to see if you can build your Edge in the market to be profitable.

With that being said, what is a cash account and what is a margin account? A cash account means that if you deposit five thousand dollars, you only have those five thousand dollars to trade with and you're not able to use any further leverage on top of that. if I buy something of five thousand dollars and sell that I have to wait two to three business days for that cash to settle very similarly like a business account or like a transaction on a checking account. But when it comes down to a margin account, margin means that I have that this instant buying power feature meaning that if I have five thousand dollars and sell five thousand dollars worth of this stock, I have the ability to use those five thousand dollars right away not needing to wait two to three business days for that cash to settle. but I'm only allowed three day trades within a five business day period.

so there's a catch on either side in which you end up choosing to go. My concern isn't so much on if you choose cash or if you choose margin because of, well, do you want to be restricted by the PDT rule or not? And I know that that's a common obstacle for a lot of people that are just getting started because all they're focused on is trying to make money right now. But let's be honest, it takes them to understand how to actually trade in this market. If you cannot explain to me why you're buying and actually explaining the thought process behind that trade, your Edge your risk to reward ratio where you plan to cut losses right, your risk management.

If you you can't explain your entry, exit, cut losses, thought process behind that trade, then in my opinion, you're not ready to take that trade. So why are we even talking about? well I don't want to be under the PDT rule or I don't mind being under the Pd2 rule. The main focus that I would stray away from margin accounts I mean I use a margin account myself. There's nothing wrong with having a margin count as long as you don't abuse it right.

Margin accounts also allow you to use leverage. Every trading platform is different on how much leverage they allow their users to use. Some accounts I've seen allow you to use 10 times of whatever it is that your account balances. Some are a lot more on the conservative side.

With that being said, this is where Traders can get in a lot of trouble and I want to give you a real world example as as close to you being able to understand on how dangerous this can be. The reason Leverage is so dangerous with a margin account is when you're learning how to do something, you're going to fail. And normally when you fail, it just means that you might have a bad experience. When you fail in the stock market and you're trading with real money, you lose real money.

So therefore, do you want to lose real money and money that you don't even actually have because you're using leverage. Meaning that you're borrowing money to actually trade. Now this just doesn't make sense to me because margin and leverage should be used as a tool. If you have an edge that works in the market, then you can use that margin and use that leverage to borrow money and actually make more money because you have a successful system in place.

But if you are already struggling trading with a hundred dollars or five hundred dollars or a thousand dollars, yet you want to borrow more money to lose more money, How does that make any sense? It's kind of like how it is in the real world. People think that money will fix all of their problems, but often in life all it does is it amplifies whatever it is that their current problems are and it just exaggerates each one of them because with more money comes more problems if not respected and the stock market is no different. Obviously, if you know when to properly use and accommodate your position size, then margin and leverage can be very, very useful for a Trader that respects the leverage. But if you are someone that sucks at cutting losses, and if you are someone that doesn't understand the importance of risk management and position sizing, then all you're really doing is you're putting yourself in a hole where you're going to dig yourself deeper than you would have been in if you simply didn't borrow money that wasn't even yours in the first place.

Let me give you a very simple example: Why would you borrow money in trying to learn something that you don't even know how to actually make money with? Yet when you're learning how to do something? I'm a big believer in trying to size down as much as possible to focus on the one thing that is most important and that is learning how to trade. You can do that for free. You can do that with paper trading. It doesn't require any real money, but again, the most common Trader often tries to just jump right into it, tries to copy other people and thinks that this is going to be an easy way out.

And guess what? I Can tell you from my experience every single day that I am put up to the T to trade I'm presented with new challenges every single day and I've been doing this for years and you think that you can come on in with your few hundred or few thousand dollars and it's just going to come right to you. I mean if that's the way that you want to approach life I wish you nothing but the best, but trust me, the stock market is going to be a bad place to learn that you have an ego problem. Remember if you respect the market, it will to the best of its ability, try to respect you. This is a market where you should really take time to understand all the risk that come with it and to size down as much as possible to make sure that when you do lose money or do take a bad trade, that you minimize the amount of money that you lose as you're learning how to do something.

Just because you have money doesn't mean that you need to be thrown it away. and this is why I think when asking the question of should I use a cash account or should I use a margin account I Don't think it's so important based off of if you want to be in the PDT rule or not I think it's more important of are you disciplined enough to use a margin account that normally comes with leverage? Are you disciplined enough to not borrow money based off of Leverage when the actual trade is not going according to plan and only you can answer that? So I Really hope that this video can be direct enough for those that are just getting started that are maybe on the edge of using leverage and you can have a margin account and not use the leverage. But I Just want to make sure that when you do have that margin account and you see that you have the ability to trade with more money than you have in your account that you choose to Simply respect it again. Our job here is to Simply look out for the beginner Trader and I hope that you see this video as just that I Hope that you're I Hope that we earn your thumbs up in this video and if you have any questions, feel free to shoot me a direct message via Discord And that's that first link in the description down below.

I Do want to remind you that if you're an absolute beginner and you want the ability to watch me trade live every single day I Work with one team and one team only and that is my learn plan profit team and that is that second link in the description down below. Appreciate your time like always. Let's make sure that we end the year on a green up. Take it easy team.