Margin Trading
Margin trading involves the purchase of investments,
such as stocks and mutual funds, in an existing investment account, using leveraging, i.e. monies
borrowed against other existing investments in your investment account. Investors who purchase
additional investments on margin are charged margin interest for the amount of the funds borrowed and
can also expose themselves to enhanced downside losses in the event of a decline in the financial
markets.
Margin trading is only for experienced,
knowledgeable investors who can afford to lose money in the event of a downturn in the financial
markets. In many instances, margin trading only benefits your financial advisor by affording him
or her access to enhanced sales commissions through leveraged trading activity.
In the end, margin loans have to be paid back
from your account and can sometimes give a false impression of account profitability. If you feel
you have been victimized by inappropriate margin trading activity, we invite you for a free initial
consultation to assess your case.
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