Margin trading is a system that enables investors to open positions that are much larger than their own capital. It is popular with traders and brokers and is nowadays a growing trading system.
In margin trading the trader is required to commit a percentage of the total order price when a margin trade is initiated. This initial investment is referred to as the margin.
The most obvious advantage of margin trading is the fact that due to the higher relative value of trading positions it can result in higher profits.
In addition, margin trading can be useful for diversification, since traders can open multiple positions with relatively small amounts of investment capital.