Margin is to investing, as the Formula 1 is to the average mini-van. Leveraged trading is a high-octane marketplace with higher risk and higher reward plus a crippling penalty for failure. This topic is for intermediate level traders and should be undertaken with extreme care and risk management. When using margin, an investor uses a loan of either fiat money or the asset itself in order to increase the size of an order with the purpose of increasing the potential for profit. Normally, the borrowed money is used with a payment of interest to the lender. These can either be taken over time or as a lump sum, depending on your broker or exchange platform. For a basic example, think of a traditional marketplace. Pay close attention as this does get a little tricky. This is the power of margin and leverage. By utilizing debt, you can increase buying power and increase the potential for profit. However, it also increases the potential for great loss. In our previous scenario, if you had not been able to sell the bikes you would have still owed the loan to the bank with 5 bikes in your hand and a new pile of debt.