Margin trading has two main aspects: leverage and shorting. When trading with leverage, a trader borrows assets to increase the amount of assets they are trading. By doing so, they magnify the gains or losses of their trade. The borrowed assets are known as a margin loan. To obtain the margin loan, the trader puts up assets that serve as collateral. The terms of the margin loan specify a collateral-to-loan ratio. If the trade falls below the specified ratio, the trade is liquidated and the lender gets repaid using the trader's collateral. Margin trading also includes shorting. When shorting, a trader essentially sells assets they do not own. The short investor borrows an asset and sells it with the expectation that the asset will lose value.