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Margin trading is a trading process that uses borrowed funds from a financial broker to increase the size of trades and achieve greater profits. Here’s a detailed explanation:

*How does margin trading work?*

1. *Initial Deposit*: The trader makes an initial deposit, known as the initial margin, with the financial broker.

2. *Leverage*: The financial broker allows the trader to use leverage, which enables them to trade assets larger than the initial deposit.

3. *Buying on Margin*: The trader can buy assets using borrowed funds from the financial broker.

4. *Selling on Margin*: The trader can sell the assets purchased on margin, and they must return the borrowed funds to the financial broker.