Buying on Margin
What is Buying on Margin?
Borrowing money from a broker to buy securities, using your investments as collateral.
Understanding Buying on Margin
Margin lets you control more securities than your cash alone would buy. In the U.S., Federal Reserve rules generally limit initial borrowing to 50% of the purchase price.
If your account value falls below the maintenance requirement, the broker issues a margin call: you must add cash or securities, or the broker may sell your holdings without asking.