Margin Funding
Margin funding, offered by brokers, lets traders borrow funds to enhance their purchasing power in financial markets. Functioning as a loan, it requires collateral—shares already owned or soon to be bought. This leverage amplifies both profits and losses, increasing potential gains while elevating risk. By using borrowed capital, traders can control larger positions than their own funds permit, but they must repay the loan with interest. It’s a powerful tool that intensifies market outcomes, demanding careful risk management.
Related Terms
Indices
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Delivery Trading
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Dividend Stocks
Dividend stocks are shares of companies that distribute a portion of their profits to shareholders...
Issuer
An issuer is the company that sells its shares to the public for the first...
Index Arbitrage
Index arbitrage is a trading strategy that aims to generate returns by exploiting short-term price...
Hammer Candlestick Pattern
A Hammer Candlestick pattern occurs when a stock, commodity, or currency opens lower than its...
