Trading on margin means borrowing money from the broker to buy more securities than you would be able to purchase with your own cash. By doing so, Investors can increase their potential profits, but it also increases the potential losses. The margin acts as a form of collateral that helps ensure the investors can cover potential losses. In the event that the securities they purchase lose value.
The amount of margin required to trade depends on several factors, including the brokers policies, the type the type of securities being traded, and the investors level of experience and financial resources. Margin requirements are usually expressed as a percentage of the total value of securities being traded. For example, if the margin requirement is 50% an investor would need to deposit $ 5,000 in cash or securities to bu $10,000 with of securities margin.