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margin trading is a financial instrument that allows investors to conduct a wider range of trading operations by borrowing funds or stocks from securities companies. specifically, margin trading includes two aspects:

financing transactions:when investors want to buy a certain stock but do not have enough funds on hand, they can choose to raise funds from securities companies, that is, borrow money to buy the stock. this operation allows investors to make larger investments when funds are insufficient, thereby magnifying the scale of investment and potential returns.

margin trading:if an investor is bearish on a certain underlying asset, he can borrow the underlying asset from a securities company and sell it. this is the concept of short selling. for example, if an investor believes that the price of a certain stock will fall, he can borrow the stock from a securities company and sell it, and then buy it back from the securities company after the stock price falls, thereby making a profit.

the core of margin trading lies in the leverage effect. through margin trading, investors can magnify their investment scale, thereby increasing potential returns to a certain extent. however, this operation also comes with certain risks. first, investors need to pay a certain amount of interest as the collateral cost of using funds or stocks. second, due to the leverage effect, investors' losses will also be magnified, which means they face higher risks.