Margin account

A margin account is a brokerage account that lets an investor borrow money from the broker to buy more securities than their cash alone would allow, using their existing holdings as collateral. This is called trading on margin, and it magnifies both gains and losses since the investor is now investing borrowed money on top of their own.

If the value of the account falls too far, the broker can issue a margin call requiring the investor to deposit more cash or sell holdings to cover the loan, sometimes forcing a sale at the worst possible time. Margin accounts are riskier than standard cash accounts and are generally recommended only for more experienced investors.