Margin trading allows investors to borrow from their broker to buy more shares than they could with their own capital.
How It Works
With 2:1 margin:
- You have $10,000
- Broker lends $10,000
- You buy $20,000 worth of stock
- If stock rises 10%: you make $2,000 (20% on your capital)
- If stock falls 10%: you lose $2,000 (20% on your capital)
Margin Rules in Asia
| Market | Max Leverage | Margin Call |
| Japan | 3.3x | Below 25% |
| China | 1x (limited) | Below 130% |
| India | 5x (intraday), 2x (delivery) | Varies |
| South Korea | 2.5x | Below 140% |
China's Margin Trading Crisis (2015)
In 2015, margin debt in China's market surged to record levels, fueling a massive bubble. When the bubble burst, forced margin liquidations accelerated the crash — SSE fell 40% in weeks. Regulators have since tightened margin lending rules significantly.