Margin Account

AAA

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.

RELATED TERMS
  1. Borrowed Capital

    Funds borrowed from either individuals or institutions. Borrowed ...
  2. Call Deposit Account

    A bank account for investment funds that offers the advantages ...
  3. Buying Power

    The money an investor has available to buy securities. In a margin ...
  4. Current Market Value - CMV

    The resale valuation attached to a security held long in an investor's ...
  5. Remargining

    The process of bringing an account up to minimum equity standards ...
  6. Cash Account

    A regular brokerage account in which the customer is required ...
Related Articles
  1. Introduction to Margin Accounts
    Active Trading Fundamentals

    Introduction to Margin Accounts

  2. Introduction To Single Stock Futures
    Options & Futures

    Introduction To Single Stock Futures

  3. Shorting ETFs: Profit Or Peril?
    Mutual Funds & ETFs

    Shorting ETFs: Profit Or Peril?

  4. How does margin trading in the forex ...
    Forex

    How does margin trading in the forex ...

comments powered by Disqus
Hot Definitions
  1. Letter Of Credit

    A letter from a bank guaranteeing that a buyer's payment to a seller will be received on time and for the correct amount. ...
  2. Due Diligence - DD

    1. An investigation or audit of a potential investment. Due diligence serves to confirm all material facts in regards to ...
  3. Certificate Of Deposit - CD

    A savings certificate entitling the bearer to receive interest. A CD bears a maturity date, a specified fixed interest rate ...
  4. Days Sales Of Inventory - DSI

    A financial measure of a company's performance that gives investors an idea of how long it takes a company to turn its inventory ...
  5. Accounts Payable - AP

    An accounting entry that represents an entity's obligation to pay off a short-term debt to its creditors. The accounts payable ...
  6. Ratio Analysis

    Quantitative analysis of information contained in a company’s financial statements. Ratio analysis is based on line items ...
Trading Center