Trading on margin can magnify losses or profits.

Question

Quizplus · Accepted Answer

Trading on margin allows traders to leverage their positions by borrowing money from a broker to increase the size of their trades. This can lead to higher profits but also increases the potential for losses. Margin trading involves borrowing funds and using them as collateral for larger trades, which means that losses can be magnified beyond the initial investment. Therefore, trading on margin can both magnify profits and losses.

Trading on Margin Can Magnify Losses or Profits