WORLD HISTORY

Detailed explanation-1: -Definition: In the stock market, margin trading refers to the process whereby individual investors buy more stocks than they can afford to. Margin trading also refers to intraday trading in India and various stock brokers provide this service.

Detailed explanation-2: -To buy stocks on margin, a margin account must be opened and approval obtained for the loan. If the stock’s price rises, the investor can sell the stock, repay the loan, and keep the profit. If the stock’s price falls, the broker may issue a margin call, requiring more cash or selling the stock.

Detailed explanation-3: -One of the most-repeated adages in investing is to “buy low, sell high.” Buying low and selling high simply means purchasing securities at one price, then selling them later at a higher price. This bit of investing wisdom offers a relatively straightforward take on how to realize profits in the market.

Detailed explanation-4: -The downside to using margin is that if the stock price decreases, substantial losses can mount quickly. For example, let’s say the stock you bought for $50 falls to $15. If you fully paid for the stock, you would lose 70% of your money. However, if you bought on margin, you would lose more than 100% of your money.

Detailed explanation-5: -A buy low sell high approach can also help investors to beat the market if their portfolio performs better than expected. If an investor is skilled in timing their trades, consistently buying low and selling high, they have a better chance of beating the market than investors who buy and hold.