What are the benefits and risks of a margin account?

Benefits:

  • Purchase more shares than you could with just the available cash in your account, based on your eligible collateral.

  • If the stock price goes up, your earnings are amplified because you hold more shares.

  • You're able to short securities and catch market opportunities in both directions.

Risks:

  • You can lose more than your initial deposit.

  • The brokerage firm can force the sale of securities in your account.

  • The brokerage firm can sell your securities without contacting you.

  • You are not entitled to an extension of time on a margin call.

  • Open short-sale positions could cost you.

Click here to learn more about trading in a margin account.

 

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