In the securities industry margin refers to borrowing money from a brokerage firm to buy a stock and using your investment as collateral. Investors generally use margin to increase their purchasing power so that they can own more stock without fully paying for it.  The downside is that margin exposes investors to the potential for higher losses should the value of the stock decline.

The risks involved with investing on margin include: losing more money than you deposit in your account; having your securities sold without your permission to pay off an increasing margin (debt) balance; being required to deposit more funds into your account; and not being able to get an extension in time to make payment.

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