The practice, known as margin trading, involves putting up a modest amount of cash to invest with significantly larger buying power. But without getting into details, let's just say margin trading is always costly because of the interest rates on these loans. A margin call is an event that happens to margin traders where their broker demands more money. (Image credit: Future)Fundamentally, margin calls happen because of this lack of investor equity in a portfolio. So before you engage in any margin trading, have a full understanding of your broker's structure – including the specifics of margin calls, minimum equity requirements and other fine print.

Source: CNN October 29, 2023 13:07 UTC