Margin Debt

1. The value of securities that are bought on margin.

2. The total value of all margin debt in a country or stock exchange. It is often viewed as a sentiment indicator, as margin debt is highest when euphoria is highest among market participants. Peaks in the market usually coincide with peaks in margin debt. Since a falling market causes investors to sell and decreases margin debt, this may be a self-fulfilling prophecy a huge rise in margin debt may not be a sign of a peak in the market yet. And due to the increased sophistication of methods employed by financial institutions, margin debt may not realistically reflect sentiment of the majority of participants.

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