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Other than being able to borrow to invest, how is a margin trading account different from a cash account?
Probably the most significant difference is the Damocles Sword hanging over your head, the Margin Call. In a nutshell, the lender (your broker) is going to require you to have a certain amount of assets in your account relative to your outstanding loan balance. The minimum ratio of liquid funds in the account to the loan is regulated in the US at 50% for the initial margin and 25% for maintenance margins. So here's where it gets sticky. If this ratio gets on the wrong side of the limits, the broker will force you to either add more assets/cash to your account t or immediately liquidate some of your holdings to remedy the situation. Assuming you don't have any/enough cash to fix the problem it can effectively force you to sell while your investments are in the tank and lock in a big loss. In fact, most margin agreements give the brokerage the right to sell your investments without your express consent in these situations. In this situation you might not even have the chance to pick which stock they sell. Source: Investopedia article, "The Dreaded Margin Call" Here's an example from the article: Let's say you   purchase $20,000 worth of securities   by borrowing $10,000 from your   brokerage and paying $10,000 yourself.   If the market value of the securities   drops to $15,000, the equity in your   account falls to $5,000 ($15,000 -   $10,000 = $5,000). Assuming a   maintenance requirement of 25%, you   must have $3,750 in equity in your   account (25% of $15,000 = $3,750).   Thus, you're fine in this situation as   the $5,000 worth of equity in your   account is greater than the   maintenance margin of $3,750. But   let's assume the maintenance   requirement of your brokerage is 40%   instead of 25%. In this case, your   equity of $5,000 is less than the   maintenance margin of $6,000 (40% of   $15,000 = $6,000). As a result, the   brokerage may issue you a margin call. Read more: http://www.investopedia.com/university/margin/margin2.asp#ixzz1RUitwcYg