Margin magnifies the percentage move of your personal investment. Cash Only ($10k) On Margin ($10k Cash + $10k Loan) $2,000 profit (20% return) $4,000 profit (40% return)* Stock Falls 20% $2,000 loss (20% loss) $4,000 loss (40% loss)* *Before interest and fees ⚠️ Key Risks to Know
: This is the total amount of money available to buy securities, including your own cash and the potential margin loan. ⚖️ The Impact of Leverage what is buying on margin
Buying on margin is considered a high-risk strategy and is generally not recommended for beginners. Buying on Margin: How It Works and Key Risks - Wealthsimple Margin magnifies the percentage move of your personal
: Since this is a loan, your broker charges interest on the borrowed amount. Rates often range from 5% to 12%+ and accrue daily. Buying on Margin: How It Works and Key
: The percentage of the purchase price you must pay with your own cash. Under Regulation T , this is typically 50% for stocks.
: The minimum amount of equity you must keep in your account at all times. This is often around 25% of the total market value of the securities.