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Margin (finance)

Margin (finance)

Margin refers to the difference between the total value of securities held in an investor's account and the amount borrowed from a broker to buy securities.

A margin refers to the amount of equity an investor has in their brokerage account. "To margin" or "to buy on margin" means to use money borrowed from a broker to purchase securities. You must have a margin account to do so, rather than a standard brokerage account. A margin account is a brokerage account in which the broker lends the investor money to buy more securities than what they could otherwise buy with the balance in their account.



A margin account is a standard brokerage account in which an investor is allowed to use the current cash or securities in their account as collateral for a loan.



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. This is different from a regular cash account, in which you trade using the money in the account.



In business accounting, a margin refers to the difference between revenue and expenses, where businesses typically track their gross profit margins, operating margins, and net profit margins.



A margin call is a broker's demand of an investor who is using margin to deposit additional money so that the margin account is brought up to the maintenance margin requirement.

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