What is Margin Trading ?

How Margin Trading Work

1. Margin Account: To engage in margin trading, investors need to open a margin account with a brokerage. This account allows them to borrow funds against the value of their existing securities. 2. Leverage: Leverage is the key feature of margin trading. What is Margin Trading ?  It magnifies both potential gains and losses. For example, if an investor has $1,000 and uses 2x leverage, they can control a position worth $2,000. 3. Margin Call: Brokers set a minimum account balance, known as the maintenance margin. If the value of securities falls below this level due to market movements, What is Margin Trading ? the broker may issue a margin call, requiring the investor to deposit additional funds or sell some securities to cover losses.