How Canadian Markets Work

Episode 9: Cash and Margin Accounts

Hosts: John and Jane Runtime: 14 Minutes

Episode Summary In this episode, John and Jane discuss the mechanics of borrowing to invest. While a cash account is straightforward—you pay for what you own—a margin account introduces leverage, a tool that amplifies both your potential gains and your potential losses. Using a step-by-step numerical example, the hosts explain the "maintenance requirement" and the dreaded margin call. They reveal why the system is structurally designed to protect the broker, often forcing investors to sell at the exact moment prices are worst, and why being "right" about a stock isn't enough if ...