Margin Trading
Margin trading is a strategy where traders borrow funds from a broker to amplify their positions in stocks, commodities, currencies, futures, or options. By using leverage, it allows for larger trades than one’s own capital would permit, boosting potential profits. However, it also magnifies losses if the market moves unfavorably. Collateral, typically in the form of securities, secures the loan, and interest is charged on the borrowed amount. It’s a high-risk, high-reward approach requiring careful management.
Related Terms
Donchian Channels
A Donchian Channel is a technical indicator showing the range between an upper band (highest...
Differential Pricing
Differential pricing is a strategy where a product or service has varying prices based on...
Equity Delivery
Equity delivery, also known as delivery trading or long-term investing, involves the purchase of shares...
Convertible Bonds
A convertible bond is a hybrid security that functions initially as a debt instrument, paying...
MACD
MACD (Moving Average Convergence Divergence) is a popular technical indicator used to spot changes in...
Call Option
A call option is a derivative contract granting the right, but not the obligation to...
