Even those who advocate buying on margin in some situations despite the risk warn that it can amplify losses and requires earning a return that exceeds the margin loan rate. “Margin trading is ...

If the $50 stock you bought falls to $40 after a year, your loss would have been $1,000 without buying on margin — $4,000 ending value minus $5,000 initial investment.

Margin trading allows investors to borrow money from a brokerage to increase buying power. While it offers the potential for larger returns, it also increases the risk of losses that can exceed ...