What is margin trading and what are its risks?

Margin trading allows investors to borrow money from a broker to buy more securities than they could with their own capital alone. The investor pays a percentage of the total trade value, called the margin, while the broker finances the rest. It increases both potential returns and potential losses. If the value of the securities drops, the investor may face a margin call, requiring them to deposit more funds or sell assets to maintain the required margin level. Risks include amplified losses, interest charges, and even liquidation of assets without prior notice. It is suitable for experienced investors who can manage risks effectively. Poor decisions or unexpected market movements can lead to losing more money than initially invested, making margin trading a high-risk strategy.