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Sean HymanSean Hyman
Keymaster
Post count: 3912

As brokers increase margin requirements (because they know risks are rising), it causes those trading on margin to either have to bring in cash to bring down their margin percentage OR sell some stock to get back in compliance with the new requirements. If they do not do that fairly quickly, the firm has their margin clerks sell off part of their shares to get the account back in line with the new higher margin requirements. It’s just one of the many reasons why I don’t encourage any of you to trade on margin. https://www.zerohedge.com/markets/interactive-brokers-hikes-margins-35-ahead-surge-election-volatility

As more brokers do this, it can cause a wave of selling….forced selling, that tips the scales back toward the bears and heightens the chances of the next downtrend unfolding.