What does does buying a stock on margin mean?

Answer 1

Buying on margin means the broker you use will lend you additional money to trade, but they also begin charging interest for the money as soon as you use it. It's a little like a credit card, but you have to pay interest from the moment you use the money.

You must fill out an application for a margin account and be approved by the broker.

There is a chance too for what's called "a margin call." This can occur if a stock you buy on margin goes down to a point they deem is too low and they'll want you to put more money in the account to help cover the loss.

Also, if a trader wants to short stocks they'll need to open a margin account to do so.

I have a margin account, but rarely use it unless the general market trend up is very strong or if I want to short. Otherwise, you can really get in a bad way if the stock goes down and you're paying 10% on the original balance too.

Trade on!

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Answer 2

Margin means borrowing some money with stock etc. as collateral.

So like $2000 value account might able to buy $10000 in stock.