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No Food for Thought

Questrade's "Margin Account": A marginally considered nomenclature for a regular account

admin Saturday April 14, 2018

So you've joined Questrade and now want to open a main investment account to invest most of your money. It's not for an RRSP, or any other registered account. At the Account Selection stage, Questrade asks you which account type you want, and you can only see specialized account types. Questrade offers you a margin account, a managed account, but you fail to see a cash account. Could Questrade be stupid enough to not offer the simplest and most common account type?

Turns out the answer is negative. Questrade simply wanted to facilitate (and probably encourage) margin trading, so it made margin trading part of its regular accounts. So they named that account type "Margin account", only failing to specify, either in the name or in the account type's description, that using margin is completely optional, so that the majority which is just looking for a regular unregistered account should also use that type.

Unfortunately, that's not the only problem. Questrade also automatically allows you margin if you open a margin account. For example, although I just put the minimum 1000 CAD in my "margin account", I still have a 3330 CAD buying power. And that is not only the default setting; you cannot disable borrowing. So when you bid in your margin account, you'll have to consider "Cash" minus your open orders, not "Buying power".

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