What Is Margin? Meaning & Example
Definition
Margin is money borrowed from a broker to buy investments, or the collateral required to hold a leveraged position. Trading on margin increases risk and involves interest costs.
Related terms
Leverage means using borrowed money or derivatives to control a larger position than your own capital alone allows. It magnifies both gains and losses.
Margin CallA margin call is a demand from your broker to add funds or reduce positions when your account equity falls below required levels. If you do not act, the broker may sell your holdings.
Brokerage AccountA brokerage account is an account with a licensed firm that lets you buy and sell investments such as stocks, bonds and funds. Taxable brokerage accounts have no special tax benefits.
What is Margin?
Margin is money borrowed from a broker to buy investments, or the collateral required to hold a leveraged position. Trading on margin increases risk and involves interest costs.
Can you give an example of Margin?
A margin account might let you buy $20,000 of stock with $10,000 of your own money.