USA HISTORY

Detailed explanation-1: -Description: The process is fairly simple. A margin account provides you the resources to buy more quantities of a stock than you can afford at any point of time. For this purpose, the broker would lend the money to buy shares and keep them as collateral.

Detailed explanation-2: -Buying on margin is borrowing money from a broker in order to purchase stock. You can think of it as a loan from your brokerage. Margin trading allows you to buy more stock than you’d be able to normally. To trade on margin, you need a margin account.

Detailed explanation-3: -What is buying on margin? An investor can buy securities using money borrowed from a brokerage firm (rather than paying for the securities in full). This is known as “buying on margin.” Buying on margin requires opening a margin account and depositing an initial amount of purchased securities.

Detailed explanation-4: -Buying on margin occurs when an investor buys an asset by borrowing the balance from a bank or broker. Buying on margin refers to the initial payment made to the broker for the asset-for example, 10% down and 90% financed. The investor uses the marginable securities in their broker account as collateral.

Detailed explanation-5: -What is the relationship between Margin and Leverage? You use margin to create leverage. Leverage is the increased “trading power” that is available when using a margin account. Leverage allows you to trade positions LARGER than the amount of money in your trading account.