what is margin?

7million7years answered one year ago …

A margin loan is usually a finance facility offered by your broker that allows you to, say, buy $200 worth of a stock putting up only $100 of your own money (the actual amounts vary buy both broker and stock).

You pay the broker interest on the amount of 'margin lending facility' used.

There is a risk that if the stock drops in price substantially that the broker will either sell down some stock to bring the lending ratio back in line and/or ask you to put up some more money.

... a great way to increase both your upside and your downside, so watch out.

BTW: I use a HELOC and margin lending to effectively fund 100% of my 'play money' stock purchases ... anything more serious may be on margin, but is just as likely to be all cash.