Margin trading is an investment strategy where an investor uses borrowed money from a brokerage firm alongside their own capital to purchase securities.
To margin trade, an investor opens a margin account and deposits initial collateral with the broker. The broker then lends money against that collateral.
Margin trading is a double-edged sword. Leverage amplifies gains when prices rise, but losses are equally magnified when prices fall.
In Bangladesh, the BSEC regulates margin trading and sets margin ratios to manage market risk.