Margin Account

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DEFINITION of 'Margin Account'

A brokerage account in which the broker lends the customer cash to purchase securities. The loan in the account is collateralized by the securities and cash. If the value of the stock drops sufficiently, the account holder will be required to deposit more cash or sell a portion of the stock.

INVESTOPEDIA EXPLAINS 'Margin Account'

In a margin account, you are investing with your broker's money. By using leverage in such a way, you magnify both gains and losses.

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