Margin

Definition: Margin is a way to finance your stock purchases. Your broker will lend you up to 50% of the purchase price. For example, if you had $5,000 to invest, you could buy $10,000 worth of stock. You pay interest on the loan and repay it when you sell the stock. If the price of the stock falls below 75% of the original price, your broker will require you to deposit more money in your account or sell the stock a pay back the loan.