Two of the most important concepts that traders need to know are leverage and margin. If you want to become a profitable trader in the market, you need to know about these terms. Amargin is the loan given by your broker that allows you to put up your funds and the securities in your account and use them as leverage in order to engage in larger trades.
However, in order to get approval for using margin, you will need to open a margin account. The collateral for the loan is the securities and cash that you deposit in your margin account but the money you borrow to use as margin doesn’t come for free. You will have to pay an interest on the amount that you borrow. In general, you can expect to pay interest rates of anywhere between 5-10% on the margin.
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