Okuzeka
Investing & the Stock Market vocabulary · Orders & Trading

Margin trading

Meaning in investing & the stock market, with examples

/ˈmɑːrdʒɪn ˌtreɪdɪŋ/nounCommon term

In investing & the stock market, margin trading means: Buying securities with money partly borrowed from a broker, using the investments in the account as security for the loan.

In Turkish: kredili işlem, kredili alım, marjin işlemi

How it is used

Investors buy on margin to increase their position size. If prices fall and the account value drops below a required level, the broker issues a margin call and the investor must add cash or the broker may sell positions. Interest is charged on the borrowed amount.

Example sentences

  1. Margin trading doubled his gains last year but also doubled his losses this spring.

  2. The broker raised its requirements for margin trading after the market became more volatile.

Common collocations

  • buy on margin
  • margin call
  • margin account
  • margin requirement
  • margin trading rules
  • leverageThe use of borrowed money or financial products to control a larger investment than your own money would allow, which increases both possible gains and losses.
  • brokerage accountAn account at a broker that holds your cash and investments and lets you buy and sell shares, bonds, funds and other securities.
  • short sellingSelling borrowed shares in the hope of buying them back later at a lower price and returning them, so that the seller profits from a fall in price.
  • volatilityHow much and how quickly the price of an investment or a market moves up and down. High volatility means large, frequent price swings.

More terms: Orders & Trading

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This page explains English vocabulary for learners. It is not financial advice.