Margin of Profit / Buying on Margin


In the stock market margin can refer to a number of things such as margin of profit and buying on margin.

This definition refers to the most used term of buying on margin, which is common practice for some investors.

Buying stocks on margin can be a risky business as it involves the investor getting a loan from his stockbroker.

The loan is to cover a stock investment that is larger than his existing capital will cover, i.e. the investor pays only a portion or margin of the actual price of the stock and using the existing stock as collateral for the loan.

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