what is to buy stocks on a margin?

Answer 1

You're basically borrowing money from the broker to buy stocks.

Answer 2

You can borrow money based on the amount of money you already have invested in stocks. Typically you can borrow one dollar for every dollar already invested. This would let you buy $2 of stock per $1 you have.

This provides 'leverage' meaning you can control more stock than you actually own, which magnifies both the risk and reward you can get.

You have to pay interest, usually at a rather high rate, so most people who buy on margin end up losing money.

Answer 3

Buying stocks on margin is just borrowing the money to buy the stocks. The stock goes down, you still have to pay off the loan.

Answer 4

well to trade on margin in commodities it means - example. To open a account you must give the firm $5000.00 (at most firms). If you want to trade (buy or sell) say the e-mini s&p the exchange (CME) min. intial margin (the amount of money you have to have in your account to put on the trade) (emini s&p = $3938) and once you are long (bought) or short (sold) you would have a maintenance margin (the amount of money that you have to keep in your account to have the trade)(emini s&p = $3150). Now if your account fell below that because the market went against you (yes you can lose more than you put in the account) would have to bring it above intial margin to keep the trade so you could send in $ or offset the trade and take the lost. Which brings 'leverage' (as someone before me said) as in commodities you are trading a futures contract that is why it is so risky! Futures contract meaning = a standardized contract, traded on a futures exchange, to buy or sell a certain underlying instrument at a certain date in the future, at a pre-set price.

Answer 5

Is a fancy way of saying you are buying with credit.

Answer 6

DONT EVERY DO IT IF U DONT HAVE EXTRA MONEY THEN DONT BUY STOCKs you will loose your shirt!