Definitions for "Margin trading"
Related Terms:
Buying on margin, Exchange-traded funds, Margin, Buy on margin, Flipping, Stock exchange, Margin loan, Market maker, Market-maker, Short selling, Margin call, Short sale, Over-the-counter, Trader, Pump and dump, Block trade, Make a market, Financial market, Sell short, Forward pricing, Fourth market, Over-the-counter market, Otc market, Exchange traded fund, Pyramiding, Selling short, Third market, Market makers, Liquidity risk, Dealer market, Aftermarket, Investor, Offering price, Stock broker, Over the counter market, Auction market, Speculation, Stag, Pairs trading, Specialist, Secondary market, Over the counter, Listed security, Best ask, Maintenance requirement, Dual listing, Prime brokerage, Firm quote, Capital markets
Investing in securities with borrowed money, using the securities themselves as security; greatly increasing both risk and potential profit.... more on: Margin trading
Buying securities, in part, with borrowed money.
Trading without having to settle the full amount by the use of a Margin Account.
Essentially, this is investing financed by short-term borrowings. It's a very risky business and not something we are keen on at all.
The use of borrowed funds to purchase securities; magnifies returns by reducing the amount of capital that must be put up by the investor.
A trading method applying leverage to an investment by investing borrowed money and your own. Margin can be used for both long and short trading. Margin gives you the ability to double the size of your investment and results in a doubling of the gains or losses of your investment.
Foreign exchange trading is normally undertaken on the basis of margin trading. A relatively small deposit is required in order to control much larger positions in the market. This is possible because when you buy one currency you sell another. Margin requirements are set by your Customer broker and vary from as little as 1% to 10% margin. This means that in order to trade 1,000,000 USD on 1 % margin, you need to place just 10, 000 USD by way of security. That same security of 10,000 USD, traded on a 10% margin could control up to 100,000 USD bought or sold against another currency
In margin trading, investors conduct transactions using funds or stock borrowed from a securities firm, after first opening a dedicated account with the brokerage. Traders must put up as collateral funds equal to a certain percentage of the value of the actual trade. This allows them to trade at a value above the amount they have on hand, but exposes them to a high degree of risk should they guess wrong about stock movements. Margin trading allows traders to make a profit even when the stock market is on the decline through such means as short-selling. If, for example, a trader borrows shares in company A and sells them for 100 yen a share, and then buys them back and returns them to the lender when they have fallen to 70 yen, the 30 yen difference can be taken as profit. Since stock prices in Japan have been on the decline in recent months, the outstanding balance of short-selling remains high at around 1 trillion yen.
System under which the investor can acquire securities without having the amount of the purchase or sell securities without having to own them.
Trading on the basis of providing only part of the cost of such trade by way of cash payment whilst funding the balance by way of a loan from the broker to the investor. Such trading is risker than the usual practice of fully funded stock and share trading can be expensive.