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5:00Margin Accounts and Margin Calls: The Mechanics of Forced Selling
Borrowing to buy stock doubles your firepower and your fragility. Drop below a line you may never have read, and your broker can sell your portfolio out from under you, at the worst possible moment, without calling first.
A margin account lets you borrow from your broker to buy more securities than your cash allows. The stock you buy is the collateral, and the loan accrues margin interest daily. The appeal is leverage: put up half, control the whole position, and your percentage gains (and losses) roughly double.
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