Stocks & Investing

Margin

Borrowing money from your broker to trade with more than you have.

Margin lets you control a larger position with borrowed cash, which magnifies both gains and losses. It also carries interest and the risk of a "margin call," where your broker forces you to add cash or sell at the worst time. The wheel is fully cash-secured and needs no margin, which is safer for beginners.

For example

With $5,000 and 2x margin you could buy $10,000 of stock. A 20% drop wipes out $2,000, or 40% of your own money.

Related terms

Short SellingCash-Secured Put

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