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.
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