Using the funds borrowed from a broker to trade securities (e.g., stocks). Margin trading works also for bonds, options, among others. Having the ability to borrow funds, individual investors can buy more securities (and other instruments) than their equity (own funds) would afford them to do. To that end, a margin account, being a loan account, is opened (with the broker). The broker determines the funds that would be available under the margin loan.

Margin trading does not suit all types of investors as it typically entails a higher level of risk, including risk of loss (of margin funds) and burden of margin interest on the borrowed funds.

This practice is also known as buying on margin. In a broader context, it is also referred to as buying investments on margin or margin investing.