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.