Margin (Broker)

Margin is borrowed money your broker lends you to buy stocks, letting you invest more than you have in cash. You'll encounter this when opening a brokerage account—many brokers offer it as an optional feature. It matters because it amplifies both gains and losses: if a stock rises, your profit is bigger, but if it falls, your losses are too. Your broker charges interest on the borrowed amount and can force you to sell positions if your account value drops too far (called a "margin call"). For example, if you have $5,000 and your broker offers 2:1 margin, you could buy $10,000 worth of stock—but you're now on the hook for interest and extra risk.