By: Michael E. Martinez

Before I start ranting and raving on how to use this investment strategy, I should explain to the novice investors what margin is and how it works. Margin is to put it simply, investing with borrowed money, mainly from a broker. It is a risky short term strategy, however.

You could use this strategy if you believe the stock price will rise as you try to maximize profits by putting more into the stock. Not just anyone can buy on margin. You have to open a separate margin account first of all. At least $2,000 is required to open your margin account. The minimum deposit is also known as the minimum margin.

You can borrow up to 50 percent of the price of the stock, which is called the initial margin. When you sell the stock, the proceeds go towards the repayment of the loan until it is fully paid. Like all loans, you have to pay interest on the borrowed money. We can only wish this was free.

I would only recommend this strategy to the professional investors of the world. Not saying that novice investors don't know what their doing, I just don't want to see novice investors get killed if their investment doesn't pay off. It's just that professional investors can hedge against this.