Margin Account: Margin accounts are brokerage accounts that allow you a much wider range of transactions than cash accounts. In a cash account you must pay for every purchase in full at the time of the transaction. In a margin account, you can on margin, sell short, and purchase certain types of derivative products. Before you can open a margin account, however, you must satisfy the firm’s requirements for margin transactions. You must also agree in writing to the terms of the account, and make a minimum deposit of at least $2,000 in cash or qualifying securities. If you buy on margin or sell short, you pay interest on the cash or the value of the securities you borrow through your margin account and must eventually repay the loan. Because both types of transactions use leverage, they offer the possibility of making a substantially larger profit than you could realize by using only your own money. But because you must repay the loan plus interest even if you lose money on the investment, using a margin account also exposes you to more risk than a cash account.

 

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Margin Account: Margin accounts are brokerage accounts that allow you a much wider range of transactions than cash accounts. In a cash account you must pay for every purchase in full at the time of the tran . . . View Full Definition

Margin Call: To protect the margin loans they make, brokers issue a margin call if your equity in your margin account falls below the required maintenance level of at least 25%. If you get a margin call, . . . View Full Definition

Margin Agreement: The agreement governing customers' margin accounts.

Margin Account (Stocks): A leverageable account in which stocks can be purchased for a combination of cash and a loan. The loan in the margin account is collateralized by the stock; if the value of the stock drops s . . . View Full Definition