Collateral
Something of value pledged to back a loan or trade, which the lender can keep if you cannot pay.
In plain English
Something of value pledged to back a loan or trade, which the lender can keep if you cannot pay.
Collateral is a promise you can touch. A house backs a mortgage. In trading, the cash you post as margin is collateral for the leveraged position your broker lets you control.
If your losses eat into it too far, the broker can close your positions to protect itself. That is what a margin call and stop-out are about.
Keep this word for good
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