The dangers which surround leveraged trading are many, today I will point out one of the biggest perils in margin trading:The past year or so has been a time where there have been lots of Mergers & Acquisitions (M&A) taking place.
In the Uk alone, there have been lots of news for a lot of high profile companies being the subject of takeover bids by other companies. When this happens the share price in such companies can be subject to a volatile market and those who have gone short better be very careful indeed.
My recommondation is try to avoid selling stocks in comapanies which have been rumoured to be of an interest to other companies in the past. If you can bring yourself to do this, then almost certainly you will have saved yourself a lot of your Margin or cash for better and safer positions.
Then in that case, you might ask "How about Going Long in such companies" and my answer would be "why not, by all means" ...
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