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What is a Margin Account?

A margin account is one in which an investor uses borrowed money to purchase additional securities. An investor is almost always required to use the securities in the account as collateral for the borrowed money.

The objective of a margin account is for the investor to magnify gains, but the opposite can also be true, and losses may lead the investor to have to sell securities in the account to cover the loan balance. There’s more upside in a margin account, but there’s more downside too.

What is 'Buying on Margin' and Margin Trading?
What is a Margin Call?

Keywords: securities, risk, margin, margin account,