A margin account is a brokerage account in which the broker lends the customer cash to purchase securities. The loan in the account is collateralized by the securities and cash. If the value of the stock drops sufficiently, the account holder will be required to deposit more cash or sell a portion of the stock.

In a margin account, you are investing with your broker's money. This can be an advantage if used properly. Funds from a margin loan can be used to purchase other securities, or they can be utilized for consumption. The risk is that a decrease in the market value of the account can create a margin call, which requires the deposit of additional securities, the deposit of cash, or the liquidation of some securities held in the account.

Buying on margin is a technique that many investors use. It allows better utilization of available resources. But as the investor, you must be completely aware and positive about buying before you actually do so.

• You can lose more funds than you deposit in the margin account
• The broker can force the sale of securities or other assets in your accounts(s)
• The broker can sell your securities or other assets without contacting you
• You are not entitled to choose which securities or other assets in your accounts(s) are liquidated or sold to meet a margin call
• The broker can increase its "House" maintenance margin requirements at any time and is not required to provide you advance notice
• You are not entitled to an extension of time on a margin call