The goal of this margin course is to help investors and traders understand what margin trading is, how it can be used to leverage trading profits, and what the risks of margin trading entail.

Margin Trading and Investing: Leverage, Profit and Risk

In the investing world, “margin” refers to an investor using money borrowed from a broker to buy securities. An investor “buying on margin,” pays for part of an asset purchase, while the broker loans the remainder.

The broker making the loan then uses the assets in the investor’s account as collateral -- if the securities purchased decline in price, and the value of the account drops, the broker can sell some of the client’s assets to repay the loan. 

The Margin Requirement is the percentage of a purchase that an investor is required by the broker or exchange to pay for in cash. So 50% margin means the investor pays for 50% of the cost of a purchase, and the broker lends the rest.

What This Margin Trading Course Will Help You Learn:

• How to use a margin account to borrow money from a broker and buy extra shares or positions
• How margin grants leverage and allows you to amplify gains
• How excessive use of margin can lead to big losses
• The difference between initial and maintenance margin requirements
• The different ways various exchanges calculate margin and grant leverage
• How certain strategies allow the trader to minimize the risks of margin trading