Market mechanics
What is the difference between a cash account and a margin account?
By Easy Money Scanner · Educational reference · Not investment advice
The short answer
A cash account requires full payment for securities and settled funds before buying again, while a margin account lets you borrow against your portfolio's value to increase buying power.
How it works
Margin accounts incur interest charges on borrowed funds and expose you to margin calls if equity falls below maintenance requirements; cash accounts avoid leverage but can trigger good-faith or freeriding violations if funds aren't settled.
An example
Buying $5,000 of stock in a cash account requires $5,000 of settled cash, whereas a margin account might let you buy $10,000 of stock using only $5,000 of your own money.
Risk & limitations
Margin trading amplifies both gains and losses and can force a broker to liquidate positions during a margin call without your consent.
Examples are hypothetical, not trade recommendations. US contract and regulatory references do not automatically apply in Canada. Rules, margin requirements and broker policies can change; confirm them with the relevant authority and your broker.