™30-second takeaway
Margin Explained, in one thought.
Learn how borrowed purchasing power magnifies exposure, financing cost and the possibility of forced liquidation.
See how each idea connects before exploring the details below.
Put the idea into numbers.
Buying 100 shares at $50 creates a $5,000 position. If the bid-ask spread is $49.95–$50.05, an immediate round trip can begin with a cost even before commissions or market movement.
Where understanding breaks down.
Assuming the displayed quote guarantees the execution price, especially in fast or thin markets.
Remember this.
Order type, liquidity, spread and routing shape the transaction you actually receive.
Borrowing against the account
Margin allows eligible customers to borrow from a broker using account assets as collateral. Buying power can increase, but ownership risk and repayment obligations remain.
Leverage works both ways
A gain on the full position can be large relative to your equity, and so can a loss. Interest expense further raises the break-even point.
Maintenance requirements
If equity falls below applicable requirements, a broker may demand funds or sell positions. Firms can impose requirements above regulatory minimums and change them.
Know the agreement
Review the broker’s rates, calculation method, house rules and liquidation rights. Margin is not simply extra cash and can create losses beyond the initial amount committed.
Use this as a foundation, then verify current rules and product details with primary sources and regulated providers before acting.
Primary sources and further reading
Verify the current details.
Market rules and product features can change. These authoritative starting points help readers confirm current information.
Connect the concept
Go from explanation to application.
Continue with a related definition and an educational calculator that makes the numbers easier to see.