USD 40,000 is the theoretical maximum buying power, not the amount you should automatically use.
Think of a margin limit like a maximum speed on a car:
Maximum = what you can do
Not a recommendation = what you should do
If you use too much margin, a stock falling can cause your losses to grow much faster.
Example:
Your money = $10,000
1× investment = $10,000 → 10% fall = -$1,000
2× exposure = $20,000 → 10% fall = -$2,000 + interest
Using the full margin limit also leaves you with less safety buffer. A big price drop can increase the risk of forced liquidation.
Bottom line:
Margin limit = maximum borrowing power, NOT free money.
For beginners, keeping some margin unused provides a safety cushion.
Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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