Are their risks involved in margin trading?
Yes, if you choose to use a margin account to borrow funds, you are invoking leverage in your account. Leverage can magnify both trading gains and losses. For example, in a cash account an investor who deposits $100 and fully invests these funds in a stock will make 10% if the stock goes up 10% and will lose 10% if the stock goes down 10%. However, if in a margin account, if an investor deposits $100 and borrows an additional $100 and fully invests this $200, his gain would be magnified to 20% if the stock rises 10% and his loss would be magnified to 20% if the stock drops 10%.