Margin funding is borrowing money from a brokerage to trade stocks or other securities. Stocks held in your account are used as collateral for the loan, and the brokerage charges interest for the duration of the loan.
In the investment world, buying stocks using borrowed money is known as a trading ‘on margin.’ When a stock’s price rises, margin trading allows investors to use leverage to increase their gains. However, when share prices fall, losses mount much more quickly.
How does Margin Funding & Trading Work?
Before margin trading funding, you should understand the account requirements, how margin works, and the characteristics and risks.