Margin is a concept frequently explored in investing / trading and it refers to borrowed money which is used to invest (a.k.a. investing on the margin). This is essentially leverage, and the investor may experience margin calls if the equity requirements (the amount they have to put up) increase on the asset or if their position starts losing a lot of money.
As with leverage, investing on the margin amplifies return and loss, and also adds the cost of interest payments.
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Patrick Curtis is a member of WSO Editorial Board which helps ensure the accuracy of content across top articles on Wall Street Oasis. He has experience in investment banking at Rothschild and private equity at Tailwind Capital along with an MBA from the Wharton School of Business. He is also the founder and current CEO of Wall Street Oasis. This content was originally created by member WallStreetOasis.com and has evolved with the help of our mentors.
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