Online stockmarket trading has received an added boost from margin financing or funds lent to stock market investors using their stocks and cash as collateral. According to leading online stock brokerage firm CitisecOnline, the number of clients utilizing margin facilities has increased at least five times over that past two years.

Dino Bate, CitisecOnline president and CEO, relates that many of their customers are utilizing their margin accounts not only to take advantage of short-term trading opportunities in the market but also find it a convenient way of accessing short-term funding requirements. "It's an effective and easy way to immediately access cash. The stand-by line allows you to multiply your purchasing power in the stock market and potentially augment your profits." Bate says. "We therefore recommend to our more active customers to sign up for our COL X2 margin account since it gives them instant access to additional funds. This provides our customers the flexibility to react immediately if and when the opportunity strikes."

Juanis Barredo, COL vice-president, also recommends using technical analysis to improve one's ability to time short-term moves for those buying on margin. Identifying market trends by observing movements and changes in market prices has proven to be a useful tool for the more advanced traders, he says. "It is best used to purchase stocks with a good chance of drawing out a quick upmove."

COL's margin account or the COL X2 is a standby credit line given to COL customers with total equity of Php200,000 and above. Unlike traditional credit facilities available in the market, COL X2 only charges interest based on the amount utilized and only on the number of days it was utilized. The interest rate of 1.5% per month is therefore, computed on a daily basis, making COL's margin facility very advantageous to for short-term buying opportunities or immediate funding requirements.

Barredo cautions, nevertheless, that trading on margin for short-term needs has its risks. "Margin trading is primarily a short-term tool best used with a sound risk management strategy." Moreover, it is best utilized only on stocks that are expected to move up and not on those that are correcting heavily or moving sideways.

Barredo also pointed out that with the current information, regular updates, analysis and developments available through COL's online trading platform, investors can have a better feel of the market. "Technology allows them to quickly access and respond to market changes thereby leveling the playing field for all investors."