What is Buying on Margin?

Margin purchases are transactions in which investors borrow money to buy securities and use the securities themselves as collateral. In the initial stage, the difference between securities and loans is equal to the amount of own cash used by investors. Margin purchases amplify gains (losses). In order to protect brokers, the above differences must be greater than a threshold. Such transactions are strictly regulated by the US Federal Reserve. [1]

IN OTHER LANGUAGES

Was this article helpful? Thanks for the feedback Thanks for the feedback

How can we help? How can we help?