Risk & position sizing
What is the impact of margin interest rates on the net yield of long-term swing positions?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
Margin interest rates reduce the net yield of long-term swing positions held on borrowed funds, since the cost of borrowing accrues daily and can erode or exceed gains from the position over time.
How it works
Margin rates vary by broker and are typically higher than risk-free rates, meaning a position must appreciate beyond the accumulated interest cost just to break even on a leveraged holding period.
An example
A trader holding a margined position for six months at an 8% annual margin rate must overcome roughly 4% in accrued interest costs before the trade becomes profitable.
Risk & limitations
Extended margin holding periods on underperforming positions can turn a marginally profitable trade into a net loss purely from accumulated interest charges.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.