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Questions & Answers On Almost Anything!

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BullpooAdmin
Administrator
#1 Wed Aug 8
A lot of you have been messaging us with a lot of interesting questions. Anything from how our trading system works to the difference between a "buy long" and a "short sell" trade. A couple of members have also proposed a great idea to start a new thread on Q&As to share with the community. We've decided to open up this thread for exactly that purpose. If you have any questions that you would like us to answer, post it here and we'll try our best to do so! We also welcome the rest of you to participate in answering any questions as well.

(Most popular Q&As will be designated to a Q&A section).
hodgies
10
#2 Sat Aug 11
How does the margining work here? I don't quite get it. - Hodgies [Edited: Wed Aug 22 ]
kevin
Administrator
#3 Mon Aug 13
Re: How Margining Works on BullPoo

Hi Hodgies, thanks for submitting your question. Let me first explain to you a bit about how margining works here, and then we can go over some examples to get a better understanding.

First off, every account has been given a margining account, which allows each member to “borrow” money to trade stocks. When you register a new account, you automatically have $1,000,000 in virtual cash to trade with. With the margining account, you have an additional $1,000,000 in virtual cash to borrow. We loosened up the margin requirements to make trading more fun.

When you “buy” a stock, you can choose to buy with 100% of your virtual cash, “or” you can choose to borrow margin at intervals of 10%, 20%, and up to 100% from your margin balance. In doing so, you use borrowed cash to invest, and free up your own virtual cash to buy other stocks. When you sell a stock, the proceeds are first used to pay back the borrowed margin. Any excess or shortages are deposited or taken out from your cash balance.

When you “short” a stock, you automatically use 100% in margin. We integrated our previous credit system with the margin system so members are not able to misuse either. This means that if you borrow a lot on margin to buy, you will have less available to short, vice versa. We also tweaked up the way you short sell. When you short a stock, cash is not deposited into virtual cash balance. Instead, we only monitor your gains and losses, and that portion gets added or deducted from your cash balance when you cover your short.

Examples:

Assume you bought 10 stocks at $10 each. You use 50% cash and 50% margin. This means, $50 gets deducted from your cash balance and $50 from your margin balance. When you sell the stocks at $15, the first $50 from your proceeds gets used to repay your margin, and the remaining $100 gets deposited into your cash. You’ve now made 100% return on the initial $50 you invested out of your own pocket. Say instead you had to sell your stocks at a loss at $4 a share. The $40 in proceeds gets used to repay your margin, but because you are still short $10, that difference gets deducted from your cash balance. You’ve now lost more than 100% on the initial $50 you invested.

Now assume you shorted 10 stocks at $10 each. You use 100% margin because you are shorting. If you cover the entire position at a gain, say at $5 a share, we simply deposit the gains back into your account, being $50. On the other hand, if you covered at a loss, say $15 a share, the loss of $50 gets deducted from your cash balance.

Remember! Although we’ve simplified the margin call requirement, it still exists, and it remains at 50/50. This means that if you borrowed $1,000,000 in margin, you must have $1,000,000 in cash and equity value. If your cash and equity value falls below this amount, say $800,000, we will liquidate (sell or cover) your margin positions until you only have $800,000 in borrowed cash remaining.

I hope the above clears up your question. I know it’s a bit lengthy, but if you have anymore related or other questions, feel free to post it up!
makemerich
10
#4 Mon Aug 13
Are OTCBB or Pink Sheet stocks open for trading? What happens when stocks get delisted, or change to OTCBB then?
kevin
Administrator
#5 Tue Aug 14
Re: OTCBB and Pink Sheets Stocks

Hi Makemerich, thanks for your question. We do not currently support trading of OTCBB or Pink Sheet stocks at the moment. If anyone holds a stock that is listed on either NYSE, AMEX or NASDAQ that is subsequently delisted to OTCBB or Pink Sheets, we no longer support that stock on our platform, and the holdings would be sold or covered at the closing price as at the date the stock was delisted.

Let me know if that answers your question, and as always, if you have anymore, feel free to post it up here.
idunno
10
#6 Tue Aug 21
Hey what if we don't have enough cash to cover a short position that's making a loss? Say if you lose a hundred thousand bucks on covering a short, and we only have ten thousand cash? Can we do it?
kevin
Administrator
#7 Wed Aug 22
Re: Covering Losing Short Positions

Hi Idunno, great question! Because a losing short position requires extra "cash" to offset the losses, a user will have to ensure that there is sufficient cash in their cash balance before they can make the cover trade. If there isn't enough cash, the user will "not" be able to put the transaction through, and will have to close off other holdings to boost up their cash balance.

Let me know if that answers your question, and if you have anymore, let me know!
idunno
10
#8 Wed Aug 22
Okay cool! So how about this situation - what would happen if I short a stock and then it gets delisted or goes bankrupt later? Since it'll be worthless, there won't be a price to cover it at.
kevin
Administrator
#9 Thu Aug 23
Re: Delisted/Bankrupted Short Position

Hi Idunno, thanks for another great question!

First we should understand what happens when you short a stock. When shorting, you actually "borrow" stocks and sell it into the market. Because the stocks were borrowed, you're "obligated to buy it back" and "return it" to the lender. Now when a stock gets delisted or the company goes bankrupt, the stocks become worthless and no longer exists. This means that there are no longer any stocks available to buy back, and therefore you earn the entire amount.

For example, say you short a 100 shares in ABC company at $10 a share. One month afterwards, for whatever reason, the company goes bankrupt. The shares no longer exist (or otherwise are worth $0). You will therefore earn the entire amount of 100 x $10 = $1,000.

Let me know if I explained that clear enough! Keep the questions coming in, I'm glad to be able to help.
ishmiel
10
#10 Mon Sep 10
Can you explain to me what the Stop-Loss is for again? Are we able to use them as a combination for target Buy-Sells?
kevin
Administrator
#11 Mon Sep 10
Re: Stop-Loss Transactions

Hi Ishmiel, thanks for your questions. The stop-loss function is exactly what the name suggests, it's really a limit order that you can place to sell a stock at a price lower than your average cost (or a cover at a price higher than the average for your short positions). "Stop-Loss" means to set a limit to the maximum loss you're willing to take on any position.

For your second question, unfortunately you currently cannot set a "Target Buy-Sell" order, which I'm assuming is setting a limit price to buy and at the same time a limit price to sell (all before you get the stock). That can be one trading feature we can look into, along with other brilliant trade options the community has suggested. What you can do is set a high-low range with a combination of a limit price to sell (higher), and a stop-loss order to sell (lower), that way it sets the cap and the floor to any holdings you may have.

If you have any other questions, or suggestions, please feel free to message us again!
zenrook
10
#12 Sat Oct 20
Is there a way to reduce the visual features (sacrifice) for faster page loads (the better good)? Perhaps this could be done on an individual account preference basis? I love the website, but it just loads too slowly, and coupled with my comment about inaccurate reporting on page loads, its a double doozy, as I have to reload the page in order to get the correct balance in the trades.
joey
Administrator
#13 Mon Oct 22
Hi zenrook,

Thank you for your suggestion. As of now, we do not have a "light" version of the website, but we are looking into measures to improve performance for our users and will take your suggestion into account - it is a definite possibility. As for the issue regarding the correct balance in your account, we are aware of it and are working to find the source of the error. Once again thank you for reporting the issue and your patience with the matter is appreciated.

Joey
BullPoo Team
rwmcpar
10
#14 Mon Nov 19
The slowness of trades is annoying. It takes a half a day at best to make transactions. I know its not the best practice to day trade but cant help the lure. Nevertheless, it still annoying.
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