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What is the difference between a cash account and a margin account?

The main difference between a cash account and a margin account with a brokerage is that a margin account allows you to borrow money to fund your investments, while a cash account only lets you use the money you already have in your account.

How does a margin account work?

When buying securities, the investor must deposit cash to settle the trade, or sell an existing position on the same trading day, so that cash proceeds are available to settle the buy order. A margin account allows an investor to borrow against the value of the assets in the account to buy new positions or sell short.

How much does a margin account cost?

There are generally no additional fees to maintain a margin account, and it can be really useful when it comes to short-term cash flow needs. If you need cash from your brokerage account in a hurry, you may not have time to wait for your broker to sell stocks and deposit the proceeds—settlement can take up to a few days.

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Risk warning: Digital asset trading is an emerging industry with bright prospects, but it also comes with huge risks as it is a new market. The risk is especially high in leveraged trading since leverage magnifies profits and amplifies risks at the same time. Please make sure you have a thorough understanding of the industry, the leveraged trading models, and the rules of trading before opening a position. Additionally, we strongly recommend that you identify your risk tolerance and only accept the risks you are willing to take. All trading involves risks, so you must be cautious when entering the market.

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