What is the difference between buying on margin and a margin call?

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2026-05-07 02:55

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Buying on margin involves borrowing funds from a broker to purchase more securities than one can afford with their own capital, amplifying potential gains and losses. A margin call occurs when the value of the securities held in a margin account falls below a certain threshold, requiring the investor to deposit more money or sell assets to cover the deficit. Essentially, buying on margin is the act of leveraging investments, while a margin call is a broker's demand for additional funds to maintain that leverage.

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