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What are the risks involved with Margin Trading?

Before investing with Margin, it's important to keep in mind the additional risks and responsibilities it carries. Carefully review your investment objectives, financial resources, and risk tolerance to determine whether margin borrowing is right for you. Here are some of the risks that you should think about before you get started:

  • Any returns, whether positive or negative, directly affect your account value. Margin can lead to greater gains, but greater losses are also possible.
  • You must repay your margin loan, regardless of the underlying value of the securities you purchased.
  • If the equity in your account falls below the minimum maintenance requirements, you’ll have to deposit additional cash or acceptable collateral.
  • If you fail to meet your minimums, Passfolio may be forced to sell some or all of your securities, with or without your prior approval.


More information about the risk of investing on margin is available at FINRA.org

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