Margin trading is a practice in finance where an investor borrows money from a broker to trade a financial asset, which forms the collateral for the loan from the broker. Here are some key points to understand about margin trading:

• Margin account: A margin account is a standard brokerage account in which an investor is allowed to use the current cash or securities in their account as collateral for a loan. The funds available under the margin loan are determined by the broker based on the securities owned and provided by the trader, which act as collateral for the loan).

• Margin: Margin refers to the amount of equity an investor has in their brokerage account. "To buy on margin" means to use the money borrowed from a broker to purchase securities. You must have a margin account to do so, rather than a standard brokerage account.

• Margin call: A margin call occurs when the value of securities in a margin account falls below a certain level, requiring the investor to deposit more funds or securities to meet the minimum margin requirement.

• Interest: When trading on margin, investors first deposit cash that serves as collateral for the loan and then pay ongoing interest payments on the money they borrow. The broker usually charges interest and other fees on the amount drawn on the margin account).

Margin trading can be a risky strategy that requires careful consideration of the potential risks and rewards. While it can increase an investors purchasing power and potentially magnify returns, it can also lead to higher losses if the investment doesnt go as planned.