In brokerage, margin has two related meanings: the loan you use to buy more securities than your cash allows, and the equity cushion the broker requires. If prices fall, your equity can drop below the maintenance level and you face a margin call to deposit cash or sell positions. That forced selling often hits at the worst moment. Margin magnifies gains in rising markets and losses in falling ones.

Key takeaways

  • Margin is leverage applied to a securities account.
  • Margin calls can force sales regardless of your long term view.
  • Interest on margin debt reduces net returns.
  • Beginners should treat margin as optional and high risk, not a default setting.