
Why use margin? It's all about leverage. Just as companies borrow money to invest in projects, investors can borrow money and leverage the cash they invest. Leverage amplifies every point that a stock goes up. If you pick the right investment, margin can dramatically increase your profit.
{C}
A 50% initial margin allows you to buy up to twice as much stock as you could with just the cash in your account. It's easy to see how you could make significantly more money by using a margin account than by trading from a pure cash position. What really matters is whether your stock rises or not. The investing world will always debate whether it's possible to consistently pick winning stocks. We won't weigh in on that debate here, but simply say that margin does offer the opportunity to amplify your returns.
The best way to demonstrate the power of leverage is with an example. Let's imagine a situation that we'd all love to be in  one that results in hugely exaggerated profits:
We'll keep with the numbers of $20,000 worth of securities bought using $10,000 of margin and $10,000 of cash. Cory's Tequila Co. is trading at $100 and you feel that it will rise dramatically. Normally, you'd only be able to buy 100 shares (100 x $100 = $10,000). Since you're investing on margin, you have the ability to buy 200 shares (200 x $100 = $20,000).
Cory's Tequila Co. then locks in Jennifer Lopez as a spokeswoman and the price of shares skyrockets 25%. Your investment is now worth $25,000 (200 shares x $125) and you decide to cash out. After paying back your broker the $10,000 you originally borrowed, you get $15,000, $5,000 of which is profit. That's a 50% return even though the stock only went up 25%. Keep in mind that to simplify this transaction, we didn't take into account commissions and interest. Otherwise, these costs would be deducted from your profit.
Margin Trading: The Risks
Investing
Leverage: Is It Good for Your Portfolio?
Discover the concept of financial leverage. Learn multiple ways to get leverage in your portfolio, and decide if leverage is a good idea for you. 
Managing Wealth
What’s a Good Profit Margin for a New Business?
Surprisingly, the younger your company is, the better its numbers may look. 
Investing
Leverage
Learn more on how leveraged investing can help you with higher investment profits through the use of borrowed money. 
Trading
Introduction to Margin Accounts
Find out what your broker is doing with your securities when you invest on margin. 
Financial Advisor
Margin Investing Gets A Bad Rap, But For The ThrillSeeker, It's Worth It
Investing on margin can be profitable but it's a risky play that needs care. 
Investing
5 Ways Debt Can Make You Money
While debt can be a negative, it can also be a positive thing if used properly. Find out how debt can actually make you richer. 
Investing
Explaining Initial Margin
Initial margin is the percentage of a stock’s price an investor must have in his account to buy that stock on margin. 
Investing
Buying on Margin
When an investor buys on margin, he or she pays a portion of the stock price – called the margin  and borrows the rest from a stockbroker. The purchased stocks then serve as collateral for ... 
Managing Wealth
What's a Good Profit Margin for a Mature Business?
How to determine if the amount you clear dovetails with the competition.