| The payment investors have to make to a broker to trade on margin, commonly used in trading futures and contracts for difference. Initial margin is usually set at a percentage of the value of the contracts being traded, for example, a trader might be required to make a deposit of 20% with the broker as initial margin. The attraction of margin trading for traders is that they are effectively using the brokers money to speculate, and if successful can get a higher return on investment than by only using their own money. The flip side is that margin trading magnifies losses as well as profits, so if the trader is unsuccessful it can be very risky.
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