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Personal Finance > Stock Market Understanding margin buying

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Margin buying is just another tool that both individual and professional investors can use to boost their returns. However it can be a risky tool, and if overused, margin debt can be disastrous.

First you need to set up what's called a "margin account" with your broker. Usually these types of brokerage accounts will have minimum capital requirements, in some cases as much as US$25,000.

Let's go through a simple example of how margin borrowing works. First let's say you want to buy stock in XYZ company, which trades for $100 a share. You have enough capital in the account to buy 250 sh...

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