Margin (Broker)

Margin is borrowed money your broker lends you to buy stocks, letting you invest more than you actually have in your account. You'll encounter this if you open a margin account (different from a regular cash account), and it matters because it amplifies both your gains and losses—you're essentially betting with leverage. Your broker charges interest on the borrowed amount, and if your investments drop too far, they'll force you to deposit more cash or sell positions to cover the loan, called a margin call. For example, if you have $5,000 but borrow $5,000 on margin, a 20% stock gain nets you $2,000 profit instead of $1,000—but a 20% loss wipes out your entire account plus leaves you owing the broker.