Margin Trading

Margin is the sum of money borrowed from a broker to pay for an investment, which is calculated as the difference between the investment’s entire value and the loan sum. Margin trading is the process of using money borrowed from a broker to trade a financial asset that serves as security for the broker’s loan.

An investor may use the current cash or assets in their account as collateral for a loan in a margin account, which is a typical brokerage account. The margin’s leverage will often compound both gains and losses. A margin call might force your broker to sell shares without your permission in the case of a loss.