Margin Account What Is It How Does It Work in Trading

2644 reads · Last updated: January 17, 2026

The term margin account refers to a brokerage account in which a trader's broker-dealer lends them cash to purchase stocks or other financial products. The margin account and the securities held within it are used as collateral for the loan.It comes with a periodic interest rate that the investor must pay to keep it active. Borrowing money from a broker-dealer through a margin account allows investors to increase their purchasing and trading power. Investing with margin accounts means using leverage, which increases the chance of magnifying an investor's profits and losses.

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