Margin Account

A brokerage account that lets an investor buy securities on credit or borrow against securities held in the account. Interest is charged on such borrowing, but usually at attractive rates compared with other forms of debt. Trading on margin can enhance investment returns considerably, but like all leveraged activities, can also backfire -- if your stocks go down, for instance. The trick is to make more investing the borrowed funds than they are costing you. The federal government limits the extent to which margin can be used in equities trading.

 

 

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