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A margin account lets you borrow money from your brokerage to buy investments, using your existing investments as collateral.
In Depth
With a margin account, you can buy more stocks or other securities than you could with just your own cash. This borrowed money is called margin. While it can amplify your gains if investments perform well, it also amplifies losses if they decline, and you'll pay interest on the borrowed amount. If your investments drop too much, the brokerage can issue a margin call, requiring you to deposit more funds or sell off assets.
Example
John used his margin account to buy additional shares of a tech company, hoping its value would increase quickly.