Individual Stocks

Online Trading

What is a “margin account”?

Margin accounts are generally used by investors who, after being authorized to do so, are able to borrow a percentage of money against the value of their account to acquire securities. The brokerage firm loans the money to the investor who, in turn, tries to earn profit from the transaction, and pay back the loan with the proceeds from the trading activity. But investors who do so are taking a relatively larger risk should the investment idea falter and losses be incurred. If the value of the securities backing up the loan from the brokerage firm declines, the brokerage firm may call the entire loan, and require immediate payment for the transaction by selling off the securities. Please check with your brokerage firm about its rules of engaging in margin-based trades.


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