When stock prices began to fall in the United States, how did Americans react?
Brokers tried to sell stocks, but no one wanted to buy them.
Many people scrambled to buy stocks on margin.
People wanted to buy stocks, but there were none left to buy.
Brokers remained confident that prices would rise again.
Answers
Answer:
Retail investors cannot buy and sell a stock on the same day any more than three times in a five business day period. This is known as the pattern day trader rule. Investors can avoid this rule by buying at the end of the day and selling the next day.
As you say, the stock market crash did not cause the Depression all by itself. But it did help, and the buying of stocks on margin was a major reason that it did so. Buying of stocks on margin refers to the practice of borrowing money to buy stocks. ... After the crash, the stock prices were way down.
Margin trading confers a higher profit potential than traditional trading but also greater risks. Purchasing stocks on margin amplifies the effects of losses. Additionally, the broker may issue a margin call, which requires you to liquidate your position in a stock or front more capital to keep your investment.