Question: What is a margin account?
Answer:
A
margin account is a bond account. It is like a savings account. Before
you can trade, you need to place a certain amount of money in what is
called a margin account. You are guaranteeing other traders that you can
pay them if you lose. That account is overseen by your broker. He
monitors your account when you trade. He usually will not allow you to
risk more than what is in your margin account. The margin account exists
so, as you win on a daily basis, they have a place to deposit your
money. Conversely, when you lose, they have an account to withdraw the
money.
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