what is margin trading, what assets can i trade on margin?

Any asset can be traded on margin be it forex, stocks, oil, gold, agricultural commodities, indices, options, futures etc. Margin trading is when your broker allows you to trade an instrument even when you do not have enough money. The broker will require you to deposit the money you have with them then they allow you trade under the conditions that your losses will not exceed the money you deposited with them.

Margin trading is buying/selling something you do not own. The broker owns the underlying asset you trade and so he allows you trade and you pay him a fee called the spread/commission. However, the broker is aware that your trade may end up in a loss (95% of retail traders lose money), so he asks you to deposit some little money as collateral and he warns you that if your losses exceed your collateral deposit, you will be required to deposit more funds (margin call requirement) failing which your trade will be closed. But, if your trade ends in a profit, your collateral will be released to you plus your profit.

Margin trading is widely used in both the stock market and CFD trading market. Every retail forex broker you see, offers margin to their customers because if they didn't, the cost of trading will be too high for the average trader like you and I. In the stock market, your collateral doesn't necessarily have to be cash you can deposit some stocks you own and if your trade is in a loss, the stockbroker may have to sell off your stock to cover any losses and keep your trade open.

Thank goodness for margin, a lot of us would not be able to trade without margin.

Margin trading originally started in the stock market where investors lend their stock out to short sellers for a fee and the short sellers also deposit some of their stock as margin collateral.

Margin trading means borrowing money from a broker to trade so you can control a larger position than what your own cash would normally allow.

It’s important to know this up front:

➡️ Margin increases both potential gains and losses.

Margins means in a lay man’s language You put down a small amount of your own money (called margin) and your broker temporarily lends you the rest so you can take a bigger trade.

Example idea (not advice):

If you have $100 and use 5× leverage, you can open a $500 position.

But if the market moves against you, you can lose money much faster than normal.