Margin Trading
Margin trading is a strategy where traders borrow funds from a broker to amplify their positions in stocks, commodities, currencies, futures, or options. By using leverage, it allows for larger trades than one’s own capital would permit, boosting potential profits. However, it also magnifies losses if the market moves unfavorably. Collateral, typically in the form of securities, secures the loan, and interest is charged on the borrowed amount. It’s a high-risk, high-reward approach requiring careful management.
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