Margin in investing is the use of borrowed money to purchase securities. This practice can amplify returns but also potential losses. A margin account lets investors borrow money from a broker to buy securities, with the account itself serving as collateral for the loan. The amount of equity contributed by the investor is known as the “margin requirement” and is necessary to maintain in order to keep the position open. Margin trading can significantly increase investment risks.
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Jenna Lofton, MBA is a stock trading and investment expert with over a decade of experience in the financial industry. She began her career as a financial advisor on Wall Street and now helps everyday investors make smarter financial decisions through StockHitter.com.
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