Margin Trading
Definition of Margin Trading
Margin trading, or “buying on margin”, is a feature offered by stock-brokers which involves purchasing higher quantities of stock than one can afford, by borrowing funds from a broker. Thus, the investor gets to purchase stocks/investments at a marginal amount of the actual value, with the stock broker funding the balance. Margin trading requires a “Margin Trading Facility Account”, where the investor deposits cash or securities as collateral for the loan.
